Jamie Spencer
BlackRock announced Tuesday its plans to acquire HPS Investment Partners for $12 billion in stock, aiming to bolster its foothold in the growing private credit market. The acquisition is expected to close in mid-2025.
CEO Larry Fink emphasized the strategic importance of the deal, stating, “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 [investments].”
Private Credit Market Boom
The deal comes amid a surge in the private credit sector. Comparable firms like Blue Owl Capital and Ares Management have seen their stock prices rise 54.6% and 46%, respectively, in 2024. BlackRock’s stock has gained 25.7% year-to-date, reflecting strong investor confidence.
Enhanced Private Credit Franchise
The acquisition will create an “integrated private credit franchise” with approximately $220 billion in assets.
- HPS Investment Partners: Manages $148 billion in assets.
- BlackRock: Oversees $11.5 trillion as of Q3 2024.
The transaction is expected to boost BlackRock’s private market assets under management (AUM) by 40% and management fees by approximately 35%, further cementing its leadership in the alternative investments space.
Strategic Rationale
Industry insiders revealed that HPS initially considered going public, which caught BlackRock’s attention. The move aligns with BlackRock’s broader strategy to expand its alternative assets business, as demonstrated by recent acquisitions:
- Global Infrastructure Partners for $12.5 billion.
- Preqin, a private market data provider, for $3.2 billion.
BlackRock’s acquisition of HPS Investment Partners underscores its commitment to meeting evolving client needs and capitalizing on the booming private credit sector. The deal strengthens BlackRock’s position in the competitive alternative assets market, signaling its readiness to adapt and grow amidst changing industry dynamics.
