BlackRock has clinched its third big acquisition this year. The world’s largest asset manager is buying HPS Investment Partners in a $12 billion all stock bid to create a leading global credit manager.
Private credit, which refers to non-bank firms offering loans to businesses, is one of the hottest sectors on Wall Street. BlackRock had previously said it expected the global private debt market to hit $3.5 trillion in AUM by the end of 2028. The firm updated that projection Tuesday, and now anticipates traditional private credit to more than double to over $4.5 trillion by 2030, according to an investor presentation announcing the acquisition.
BlackRock’s buy of HPS, a leading global credit investment manager with $148 billion in client assets, was widely anticipated. The firm was considering an IPO earlier this year but instead opted to sell to the giant asset manager. By acquiring HPS, BlackRock expects to create a combined private credit franchise with about $220 billion in client assets. The deal is expected to close in mid-2025.
“Blackrock has been talking about credit for some time. They might as well acquire a good firm versus trying to build one from scratch,” one industry executive said.
Shares of BlackRock dropped to a 52-week low of $742.22 in December 2023 but have since rebounded. The stock on Tuesday closed at $1039, up nearly 2%.
HPS co-founders Scott Kapnick, Scot French, and Michael Patterson are joining BlackRock’s global executive committee while Kapnick will also be an observer on BlackRock’s board. (Kapnick, French and Patterson are all former Goldman Sachs executives.)
Founded in 2007, HPS was known as Highbridge Principal Strategies. It originally operated as a division of Highbridge Capital Management, which was part of J.P. Morgan Asset Management. In 2016, HPS principals and employees acquired the firm from Highbridge and J.P. Morgan Asset Management. HPS employs more than 760 employees, including 252 investment professionals.
Seeking transformation
The HPS deal is the latest acquisition for BlackRock, which has been building up its alternatives platform. CEO Larry Fink is looking to push BlackRock into the more lucrative world of private markets, which include private equity, private credit and real estate, the Wall Street Journal reported in November.
In October, BlackRock closed its $12.5 billion buy of PE firm Global Infrastructure Partners, which ranks as the 20th largest global announced merger this year, according to Dealogic. BlackRock is also spending $3.2 billion to buy Preqin, a private markets data provider, that has yet to close.
Since surpassing $9 trillion AUM in early 2023, BlackRock was said to be on the hunt for “transformational” opportunities. One of BlackRock’s most meaningful deals remains its $13.5 billion purchase of iShares in 2009, which is still the largest provider of ETFs, with $4.2 trillion AUM at the end of September.
“[BlackRock] want to be in everything. And they have the market power to buy stuff,” one banker said.
Perella Weinberg Partners and Morgan Stanley provided financial advice to BlackRock, while Peter Serating, Patrick Lewis and Laura Kaufmann Belkhayat of Skadden, Arps, Slate, Meagher & Flom, along with Clifford Chance, offered legal advice. J.P. Morgan Securities served as legal advisor to HPS while Goldman Sachs, BofA Securities, Deutsche Bank Securities, BNP Paribas and RBC Capital Markets were co-financial advisors. Fried, Frank, Harris, Shriver & Jacobson acted as their legal counsel.
