Blackstone (BLK.US) in Talks to Buy HPS for $12bn, Strongly Entering Top Tier of Private Credit
1min read Blackstone (BLK.US) is close to a deal to acquire HPS Investment Partners, a move that will significantly boost its development in private credit and accelerate its becoming a major force in alternative assets, according to people familiar with the matter. The acquisition agreement could be announced as early as next week, with HPS valued at $12bn or more, and the deal will be completed through a combination of cash and stock, the people said.
The acquisition will significantly strengthen Blackstone's competitiveness in the private markets. HPS, one of the leading managers in private credit, manages more than $123bn in private credit assets, which will put Blackstone in a prominent position in the $1.6tn market that is growing rapidly. HPS also manages another $22bn in public credit and has more than 760 employees, which will provide Blackstone with richer resources and professional capabilities.
Despite being close to a deal, there is still a risk of delay or failure, according to people familiar with the matter, who asked to remain anonymous due to the sensitivity of the discussions. Blackstone declined to comment, and a spokesperson for HPS has not yet responded to a request for comment.
Blackstone chief executive Larry Fink has been actively pushing the company to enter the private markets. The acquisition of HPS will be one of the largest alternative asset management company acquisitions Blackstone has completed in less than a year. Earlier, Blackstone acquired Global Infrastructure Partners for $12.5bn, becoming the second-largest infrastructure asset manager, and is completing the acquisition of Preqin, a private market data provider, for £2.55bn ($3.25bn). Fink has promised that these transactions will help Blackstone expand its business in the private markets and lay the foundation for linking exchange-traded funds with alternative assets.
Through the acquisition of HPS, Blackstone's alternative investment business will exceed Carlyle (CG.US) and begin to rival Kkr & Co (KKR.US) and Apollo Global Management (APO.US) in private assets. Blackstone's size remains significant, with assets of about $1.1tn as of the end of the third quarter.
Blackstone's expansion into the private markets will add significant revenue and profits to the company as investors have actively shifted to low-cost index funds and ETFs and away from higher-fee active mutual funds over the past decade. The acquisition of HPS not only expands Blackstone's business but also brings more diversified revenue sources, further consolidating its leadership in the asset management industry.
