BlackRock, the world’s largest asset manager, has entered an all-stock transaction valued at approximately $12bn to acquire private credit manager HPS Investment Partners.
This move is set to create an integrated private credit franchise with $220bn in client assets.
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The merged franchise will work alongside BlackRock’s $3tn public fixed income business, offering clients a comprehensive suite of public and private income solutions.
The deal terms stipulate the payment of around 25% of the consideration after five years, with potential for further consideration contingent on the fulfilment of certain financial milestones.
Additionally, HPS employees are set to receive a retention package worth up to $675m.
BlackRock will also retire or refinance roughly $400m of HPS’s existing debt. The deal is anticipated to be finalised by mid-2025, pending regulatory approvals and standard closing conditions.
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By GlobalDataHPS founders Scott Kapnick, Scot French, and Michael Patterson will lead the new private financing solutions business division formed through the merger of the two businesses.
The trio will join BlackRock’s global executive committee, with Kapnick also gaining an observer role on the BlackRock board of directors.
The newly established private financing solutions unit will offer a diverse range of credit solutions, including senior and junior credit, asset-based finance, real estate, private placements, and collateralised loan obligations (CLOs).
Founded in 2007 as part of Highbridge Capital Management within J.P. Morgan Asset Management, HPS became independent in 2016 through a buyout by its principals and employees.
Currently, HPS manages $148bn in client assets. Its acquisition is projected to increase BlackRock’s private markets fee-paying assets under management by 40% and its management fees by 35%.
The acquisition will help BlackRock capitalise on the booming private debt market, which is expected to surge to $4.5tn by 2030. It follows BlackRock’s $12.5bn acquisition of Global Infrastructure Partners this October.
Earlier this year, BlackRock announced the $3.2bn purchase of private markets data provider Preqin.
BlackRock Chairman and CEO Laurence D. Fink said: “With GIP, and now HPS, we are expanding our private markets capabilities across our comprehensive global platform. Our Aladdin technology, including eFront, and soon Preqin, will make access to private markets simpler and more transparent. These capabilities, together with our global reach, deep relationships, and powerful technology, differentiate our ability to serve clients.”
