BlackRock Sets Sights on Private Credit Dominance with $12 Billion HPS Acquisition
1min read BlackRock has accelerated its expansion with a significant acquisition in the private credit sector, reaching a preliminary agreement to purchase HPS Investment Partners. According to sources familiar with the matter, the transaction is expected to be formally announced after the Thanksgiving holiday, with a potential price tag as high as $12 billion, surpassing HPS's previous IPO valuation estimate of $10 billion.
Founded in 2007, HPS has become one of Wall Street's largest private credit groups, managing nearly $150 billion in assets. The acquisition will considerably enhance BlackRock's competitive position in the private credit market, enabling it to better compete with industry leaders like Ares, Apollo, and Blackstone.
The acquisition of HPS is part of a larger series of strategic moves by BlackRock, which has embarked on a wave of mergers and acquisitions. In October, the firm acquired Global Infrastructure Partners for $12.5 billion, following a July agreement to purchase British private market data provider Preqin for £2.55 billion in cash.
In addition, BlackRock is in discussions with hedge fund giant Millennium Management about potentially acquiring a minority stake. These efforts align with founder Larry Fink’s strategic vision to expand the firm’s footprint in alternative investments.
This surge in acquisitions underscores BlackRock’s growing interest in the alternative investments sector, seen as a lucrative market compared to traditional ETF products due to higher management fee revenue potential. Currently, BlackRock's alternative investment assets total approximately $450 billion.
The rising regulatory pressure on traditional banks has led to a gradual retreat from core lending businesses, spurring significant growth in private credit and other alternative investments. BlackRock’s acquisition of HPS capitalizes on this trend, reflecting a belief in the expansive potential of the market.