BlackRock to Acquire HPS Investment Partners for $12 Billion
BlackRock, Inc. (NYSE:BLK) has announced a significant move to strengthen its private credit offerings by acquiring HPS Investment Partners, a global credit investment manager with approximately $148 billion in client assets.
The deal, valued at roughly $12 billion, will be paid entirely in BlackRock stock. Specifically, 12.1 million SubCo Units, which will be issued by a wholly-owned subsidiary of BlackRock and are exchangeable on a one-for-one basis for BlackRock common stock, will be utilized as consideration.
This acquisition will combine BlackRock's extensive institutional and asset owner relationships with HPS's diversified capital-raising and flexibility, creating a strong presence in the fixed income space. The goal is to optimize liquidity, returns, and diversification for clients by creating public and private portfolios. BlackRock's $3 trillion public fixed income business will now work alongside the combined private credit franchise to provide comprehensive solutions for clients.
BlackRock Chairman and CEO Laurence D. Fink expressed excitement about the merger by stating, "With the scale, capabilities, and expertise of the HPS team, BlackRock will deliver solutions that seamlessly blend public and private sector offerings to clients."
This strategic move comes at a time when global sustainable growth increasingly relies on debt financing and private equity has become a key source. BlackRock aims to support economic growth and job creation by connecting businesses of all sizes with the necessary financing.
The company anticipates that the private debt market will reach $4.5 trillion by 2030. This significant increase aligns with the long-term capital needs of clients, including insurance companies, pension funds, and sovereign wealth funds.
The new private financing solutions business unit arising from the merger will be led by HPS's Scott Kapnick, Scot French, and Michael Patterson. This platform will offer a range of credit solutions, including asset-based financing and private placements. It also aims to develop a full-service financing solution for alternative asset managers that includes direct lending and BlackRock's GP and LP solutions.
HPS CEO Kapnick highlighted the significant milestone, emphasizing the enhanced position in a competitive market and the potential to seize new opportunities. Founded in 2007, HPS has become one of the largest independent private credit platforms, recognized for its investment discipline and extensive expertise. Since its establishment in 1988, BlackRock has expanded its fixed income capabilities and currently manages approximately $90 billion in private debt client assets.