BlackRock is set to acquire global credit investment manager HPS Investment Partners in a deal valued at approximately US$12 billion ($18 billion), as it continues to build its capabilities in alternative and private markets.
This is BlackRock’s third deal in this area this year, following the acquisition of Preqin in July and, most recently, Global Infrastructure Partners (GIP) in October.
Founded in 2007, HPS manages diverse strategies within the capital structure, including privately negotiated senior debt, liquid credit, and asset-based financing and real estate, managing approximately $148 billion in assets. customers.
In a statement released on Tuesday, BlackRock confirmed that it would acquire 100 percent of HPS, with 100 percent of the consideration paid in BlackRock shares.
The shares are issued by a wholly owned subsidiary of BlackRock, SubCo Units, and exchangeable on a one-for-one basis for shares of BlackRock common stock.
Approximately 9.2 million SubCo Units will be paid at closing and approximately 25 percent of the consideration, or 2.9 million SubCo Units, will be paid in five years, subject to the satisfaction of certain post-closing conditions .
Upon completion of the transaction, the combined entity will hold approximately $220 billion in customer assets.
According to BlackRock, the combined private credit franchise will work side-by-side with BlackRock’s $3 trillion public bond business to provide public and private income solutions to clients across their entire spectrum. wallets.
“We have always sought to position ourselves ahead of our customers’ needs. With the scale, capabilities and expertise of the HPS team, BlackRock will provide its clients with solutions that seamlessly blend public and private,” said Laurence Fink, Chairman and CEO of BlackRock.
The transaction is also expected to increase private markets fee-paying assets under management and management fees by 40 percent and approximately 35 percent, respectively, and be modestly accretive to BlackRock’s adjusted earnings per share in the first year. full year following closing. .
With the deal, the companies are expected to form a new private finance solutions business unit led by HPS founders Scott Kapnick, Scot French and Michael Patterson.
The combined platform will have broad capabilities in senior and junior credit solutions, asset-based financing, real estate, private placements and secured loan obligations, and will bring together direct lending, fund financing and BlackRock’s GP and LP solutions (fund of funds, GP/LP secondaries, co-investments).
This combination, BlackRock said, creates an “integrated solution” for corporate and asset-based financing, investment grade and non-investment grade and private credit.
Kapnick, French and Patterson will join BlackRock’s global executive committee and Kapnick, who serves as chief executive of HPS, will be an observer on BlackRock’s board of directors.
“Today marks an important milestone in our drive to become the world’s leading provider of private financing solutions. Our partnership with BlackRock will further strengthen our position in this rapidly growing but increasingly competitive market,” Kapnick said.
“The combination of HPS’s proven culture of investment discipline and BlackRock’s global reach will enable us to capture new opportunities for our investors and employees and set us up for continued success for the next decade and beyond.”
The transaction is expected to close in mid-2025, subject to regulatory approvals and customary closing conditions.
Looking ahead, BlackRock noted that sustainable global growth will require higher volumes of debt financing, with markets increasingly turning to private capital as a response.
“The addition of HPS will enable BlackRock to connect businesses of all sizes, from small and mid-sized businesses to large enterprises, with financing for investments that support economic growth and job creation,” BlackRock said.
It predicts that the private debt market will more than double to $4.5 trillion by 2030.
It currently manages nearly $90 billion in private debt client assets in direct, sponsor-led and non-sponsor-led, core middle market lending in the U.S., European and Asian markets; subprime loans; investment grade private placements; real estate debt; and private infrastructure debt.
Fink said: “For more than 35 years, BlackRock has grown and evolved alongside the capital markets. With GIP, and now HPS, we are expanding our capabilities in private markets through our comprehensive global platform.
“Our Aladdin technology, including eFront, and soon Preqin, will make access to private markets simpler and more transparent. These capabilities, along with our global reach, deep relationships and powerful technology, differentiate our ability to serve our customers.
