BlackRock Acquires HPS Investment Partners in $12 Billion Deal

BlackRock Acquires HPS Investment Partners in $12 Billion Deal

BlackRock Inc., the world’s largest asset manager, announced its acquisition of HPS Investment Partners in an all-stock transaction valued at approximately $12 billion. This move marks BlackRock’s entry into the top ranks of private credit and signifies its transformation into a major player in alternative asset classes.

Expansion into Private Credit

HPS Investment Partners, founded in 2007, manages $148 billion in client assets, making it one of the industry leaders in the growing private credit market. BlackRock expects this acquisition to significantly expand its private markets fee-paying assets under management by 40% and increase its management fees by 35%.

Enhanced Client Solutions

According to BlackRock CEO Larry Fink, the integration of HPS’s expertise and capabilities will enable the company to provide clients with comprehensive solutions that seamlessly blend public and private investments. This move underscores BlackRock’s commitment to offering diversified investment options to meet the evolving needs of its clientele.

Leadership and Deal Structure

HPS founders Scott Kapnick, Scot French, and Michael Patterson will lead a new private financing solutions business unit within BlackRock. The transaction, which is subject to regulatory approval, is set to be completed in mid-2024. About a quarter of the deal will be paid over five years, with potential additional BlackRock shares based on performance.

Financial Advisors

BlackRock and HPS retained renowned financial advisors for the transaction. Perella Weinberg Partners and Morgan Stanley assisted BlackRock, while JPMorgan Chase & Co., Goldman Sachs Group Inc., and others advised HPS.

Industry Significance

The acquisition of HPS strengthens BlackRock’s position as a formidable player in the private asset space, which has gained increasing popularity among institutional investors and high-net-worth individuals. The deal puts BlackRock’s alternative-investments business on par with Carlyle Group Inc. and close to industry giants like KKR & Co. and Apollo Global Management Inc., although Blackstone Inc. remains a significantly larger competitor.

Conclusion

BlackRock’s acquisition of HPS Investment Partners is a strategic move that solidifies its position as a leading provider of diverse investment solutions. The integration of HPS’s expertise in private credit strengthens BlackRock’s capabilities in this high-growth market and further enhances its offerings to a global client base.