- M&A
- December 4, 2024
- 3 minutes read
BlackRock To Buy Private Credit Firm HPS In $12B Deal
BlackRock (NYSE: BLK), the U.S.-based asset management giant, has struck a deal to acquire HPS Investment Partners, a leading private…
BlackRock (NYSE: BLK), the U.S.-based asset management giant, has struck a deal to acquire HPS Investment Partners, a leading private credit investment firm.
BlackRock will pay $9.3bn in stock upfront to acquire HPS and $3bn of shares over five years, totaling $12.3bn. The deal includes potential earnouts of 1.6 million shares, worth $1.7bn at current prices. BlackRock also expects to assume or refinance $400mn of HPS’s existing debt after completing the acquisition.
If HPS shareholders receive the potential earnouts, contingent on hitting financial targets, and BlackRock assumes the firm’s debt, the deal’s value will be $14.4bn.
- BlackRock is the world’s largest institutional asset manager, with $11 trillion of assets under management.
- HPS is an investment firm focused on lending to private companies, a fast-growing niche of the finance sector. It has over $100bn of assets under management.
Already a dominant asset management firm with a diverse portfolio spanning stocks, bonds, and government debt, BlackRock aims to grab a larger bite of the finance industry. Earlier this year, it sealed a $12.5bn deal to acquire Global Infrastructure Partners (GIP), a private equity firm led by Adebayo Ogunlesi.
Shortly after the GIP deal, BlackRock agreed to pay $3.2bn in cash to acquire Preqin, a U.K.-based private markets data provider. HPS is the latest acquisition to help BlackRock expand its market share in the fast-growing alternative assets market. The company plans to merge HPS with its existing private credit business.
Private credit is a booming niche in the finance industry, as investment firms increasingly compete with banks to lend money to private companies. HPS was a pioneer in this niche; it began as a unit of J.P. Morgan Chase, America’s largest bank, before a management buyout that spun out an independent firm in 2016.
HPS manages $148bn of assets, making it a top-five private credit firm. It competes with industry heavyweights like Blackstone, Goldman Sachs, and Ares Management. Acquiring HPS enables BlackRock to leapfrog competitors in the private credit sector and claim a top spot.
- HPS’s founders — Scott Kapnick, Scot French, and Michael Patterson — will continue to lead the firm as a BlackRock division. Barring regulatory hurdles, BlackRock expects the acquisition to close in mid-2025.
