BlackRock Eyes Private Credit Dominance with $12 Billion HPS Acquisition Deal
BlackRock is reportedly on the verge of finalizing a deal to acquire HPS Investment Partners, a move that is set to significantly bolster its presence in the private credit sector and accelerate its status as a formidable force in the alternative assets domain. Sources familiar with the matter suggest that the acquisition agreement could be announced as early as next week, with HPS being valued at approximately $12 billion or more. The transaction is anticipated to be a combination of cash and stock.
This acquisition will notably enhance BlackRock's competitiveness in the private markets. As one of the leading managers in the private credit market, HPS oversees more than $123 billion in private credit assets. This positions BlackRock to gain a significant foothold in the burgeoning $1.6 trillion market. Additionally, HPS manages an extra $22 billion in public credit and boasts over 760 employees, offering BlackRock an expanded reservoir of resources and expertise.
Despite the ongoing negotiations being in the final stages, there remains the potential for delays or even a collapse of the talks, according to insiders who requested anonymity due to the confidential nature of the discussions. Both BlackRock and HPS have so far refrained from commenting on the matter.
Larry Fink, BlackRock's CEO, has been ardently advancing the firm's foray into the private markets. The acquisition of HPS marks one of BlackRock's largest alternative asset management acquisitions in under a year. Previously, BlackRock completed a $12.5 billion acquisition of Global Infrastructure Partners, becoming the second-largest manager in infrastructure assets, and is currently finalizing a £2.55 billion ($3.25 billion) takeover of private market data provider Preqin. Fink has asserted that these deals will facilitate BlackRock's expansion in the private market sector and lay a foundation for tying exchange-traded funds to alternative assets.
With the HPS acquisition, BlackRock's alternative investment business will surpass that of Carlyle, putting it in the same league as private asset leaders like KKR & Co and Apollo Global Management. Nevertheless, Blackstone remains significantly larger, with assets totaling approximately $1.1 trillion at the end of the third quarter.
Over the past decade, investors have increasingly gravitated towards low-cost index funds and ETFs, shying away from higher-fee active mutual funds. BlackRock's expansion into private markets is poised to generate substantial revenue and profits for the company. Acquiring HPS extends BlackRock's business scope and diversifies its income streams, further solidifying its leading position in the asset management industry.