BlackRock made its third major acquisition this year. The world’s largest asset manager is purchase HPS Investment Partners in $12 billion all-stock offering to create leading global credit manager.
Private credit, which refers to non-bank companies that offer loans to businesses, is one of the most sought-after sectors on Wall Street. BlackRock said this earlier as expected the global private debt market will reach $3.5 trillion in AUM by the end of 2028. The firm updated that projection on Tuesday and now expects traditional private loans to more than double to more than $4.5 trillion by 2030, according to investor presentation announcing the acquisition.
BlackRock’s acquisition of HPS, a leading global credit investment manager with $148 billion in client assets, was widely anticipated. The company was considering IPO earlier this year, but decided to sell to the giant asset manager instead. By acquiring HPS, BlackRock expects to create a combined private credit franchise with approximately $220 billion in client assets. The deal is expected to close in mid-2025.
“Blackrock has been talking about credit for some time. They could acquire a good company instead of trying to build it from scratch,” said one industry executive.
BlackRock shares hit a 52-week low of $742.22 in December 2023, but have since recovered. Shares closed at $1,039 on Tuesday, up nearly 2%.
HPS co-founders Scott Kapnick, Scot French and Michael Patterson are joining BlackRock’s global executive committee, while Kapnick will also serve as an observer on BlackRock’s board. (Kapnick, French and Patterson are all former Goldman Sachs managers.)
Founded in 2007, HPS was known as Highbridge Principal Strategies. It originally operated as a division of Highbridge Capital Management, which was part of JP Morgan Asset Management. In 2016, the directors and employees of HPS bought the company from Highbridge and JP Morgan Asset Management. HPS employs more than 760 employeesincluding 252 investment professionals.
Searching for transformation
The deal with HPS is the latest acquisition for BlackRock, which has been building its alternative platform. CEO Larry Fink seeks 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 purchase of PE firm Global Infrastructure Partners, which is ranked #20.th the largest globally announced merger this year, according to Dealogic. BlackRock is also spending $3.2 billion to buy Preqin, a private market data provider that has yet to close.
Since surpassing $9 trillion in AUM in early 2023, BlackRock is reportedly on hunting for “transformational” possibilities. One of BlackRock’s most significant deals remains its $13.5 billion buy 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 things,” said one banker.
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. JP 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 were their legal advisors.
