BlackRock and HPS Investment Partners (a leading global credit investment manager with about $148 billion in client assets) have entered into a definitive agreement for BlackRock to buy HPS for about $12 billion. 100% of consideration will be paid in BlackRock equity, issued by a wholly-owned subsidiary of BlackRock and exchangeable on a one-for-one basis into BlackRock’s common stock.
This deal will combine BlackRock’s strong corporate and asset owner relationships with HPS’s diversified origination and capital flexibility. The combined private credit franchise will work side-by-side with BlackRock’s $3 trillion public fixed-income business to provide clients with both public and private income solutions across their portfolios.
Adding HPS will position BlackRock to connect companies of all sizes, from small and medium-sized businesses to large corporations, with financing for investments that support economic growth and job creation. And BlackRock expects the private debt market will surpass $4.5 trillion by 2030.
The duration, returns, and yield characteristics of private credit match the needs of clients with long-dated capital, such as insurance companies, pensions, sovereign wealth funds, wealth managers, and investors saving for retirement.
BlackRock and HPS will create a new private financing solutions business unit led by Scott Kapnick, Scot French, and Michael Patterson. And this combined platform will have broad capabilities across senior and junior credit solutions, asset-based finance, real estate, private placements, and CLOs.
To create a full-service financing solution for alternative asset managers, the business will unite direct lending, fund finance, and BlackRock’s GP and LP solutions (fund of funds, GP/LP secondaries, co-investments). And this combination creates an integrated solution for clients and borrowers across corporate and asset-based finance, investment and non-investment grade and private credit. As part of this deal, Kapnick, French, and Patterson will join BlackRock’s Global Executive Committee and Kapnick will be an observer to the BlackRock Board of Directors.
Launched in 2007, HPS is a leading global credit investment manager with capabilities across the capital structure. HPS has continually demonstrated its ability to identify, structure, and execute compelling investments. Its extensive investing expertise and strong track record have advanced its growth into one of the largest independent private credit platforms. HPS’s differentiated origination platform, which spans non-sponsor and sponsor channels and is supported by a scaled and flexible capital base, offers companies a wide range of bespoke financing solutions. The firm continues to be led by its founders and long-term Governing Partners Scott Kapnick, Michael Patterson, Scot French, Purnima Puri, Faith Rosenfeld, Paul Knollmeyer, and Kathy Choi.
Since BlackRock’s founding in 1988, the firm has grown its fixed income capabilities and now serves clients with a $3 trillion platform across Fundamental Fixed Income, led by Rick Rieder, as well as Financial Institutions, Municipals, Systematic Fixed Income, Index Fixed Income, and iShares bond ETFs. And BlackRock manages nearly $90 billion in private debt client assets across sponsor- and non-sponsor-led core middle market direct lending in U.S., European, and Asian markets, venture lending, investment grade private placements, and real estate debt, as well as dedicated private infrastructure debt.
This deal will deepen BlackRock’s capabilities for insurance clients. BlackRock is a leading solution provider for insurers, representing 100 Aladdin technology clients and $700 billion in assets under management at BlackRock. And HPS is a leading independent provider of private credit for insurance clients. Adding HPS will position BlackRock as a full-service fiduciary provider of public-private asset management and technology solutions for insurance clients.
As part of closing the deal, BlackRock expects to retire for cash or refinance about $400 million of existing HPS debt. The transaction is not expected to meaningfully change BlackRock’s leverage profile. However, it is expected to increase private markets fee-paying AUM and management fees by 40% and about 35%, respectively, and be modestly accretive to BlackRock’s as-adjusted earnings per share in the first full year post-close.
Perella Weinberg Partners served as lead financial advisor to BlackRock. Morgan Stanley also served as a financial advisor, with Skadden, Arps, Slate, Meagher & Flom, and Clifford Chance acting as legal counsel. J.P. Morgan Securities served as lead financial advisor to HPS, with Goldman Sachs, BofA Securities, Deutsche Bank Securities, BNP Paribas, and RBC Capital Markets acting as co-financial advisors and Fried, Frank, Harris, Shriver & Jacobson LLP serving as legal counsel.
The deal is expected to close in mid-2025, subject to regulatory approvals and customary closing conditions.
KEY QUOTES:
“I am excited by what HPS and BlackRock can do together for our clients and look forward to welcoming Scott Kapnick, Scot French, and Michael Patterson, along with the entire HPS team, to BlackRock. We have always sought to position ourselves ahead of our clients’ needs. Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private.”
“For over 35 years, BlackRock has grown and evolved alongside the capital markets. With GIP, and now HPS, we are expanding our private markets capabilities across our comprehensive global platform. Our Aladdin technology, including eFront, and soon Preqin, will make access to private markets simpler and more transparent. These capabilities, together with our global reach, deep relationships, and powerful technology, differentiate our ability to serve clients.”
- Laurence D. Fink, BlackRock Chairman and CEO
“Today marks an important milestone in our drive to become the world‘s leading provider of private financing solutions. Our partnership with BlackRock will further strengthen our position in this fast growing but increasingly competitive market. The combination of HPS’s proven culture of investment discipline with BlackRock’s global reach will allow us to seize new opportunities for our investors and employees and set us up for continued success for the next decade and beyond. My partners and I are energized to work with Larry Fink and our new BlackRock colleagues.”
- Scott Kapnick, HPS CEO
