Blackrock Strikes $12 Billion Deal With HPS, Predicting Double Digit Growth in Private Credit

BlackRock, the world’s largest asset manager, announced Tuesday it has reached an agreement to acquire HPS Investment Partners for $12 billion. The all-shares transaction is set to bolster BlackRock’s position in the rapidly growing private-credit market by adding $148 billion in assets under management to its already massive $11.5 trillion portfolio.

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The move underscores BlackRock’s confidence in the private-credit sector, which it predicts will more than double in value over the next five years. By 2030, the market is expected to reach $4.5 trillion, driven by shifting market dynamics, technological advancements, and evolving regulations. BlackRock sees the acquisition as a pivotal step in capitalizing on these trends, which have been reshaping the financial landscape since the 2008 financial crisis.

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The Rise of Private Credit

Private credit has grown significantly in the past 15 years, fueled by stricter regulations on traditional banks that emerged after the financial crisis. This environment has opened the door for non-traditional lenders, including private equity firms, pension funds, insurers, and sovereign wealth funds, to fill the gap in lending markets. These new players have created a thriving private-credit ecosystem, offering financing solutions outside the traditional banking system.

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HPS Investment Partners, founded in 2007 by former Goldman Sachs investment banking head Scott Kapnick, has been at the forefront of this market. The firm manages $123 billion in private debt, making it a major player in private financing.

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Kapnick highlighted the significance of the acquisition, stating, “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.”

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The announcement of the HPS deal had been widely anticipated, with speculation rife in financial circles leading up to the news. Shares of BlackRock, listed on the New York Stock Exchange, rose 1% in pre-market trading following the announcement. This brings the stock’s year-to-date gain to 26%, reflecting investor confidence in BlackRock’s growth strategy.

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The HPS acquisition follows BlackRock’s $12.5 billion purchase of Global Infrastructure Partners (GIP) earlier this year, completed in October. These moves demonstrate BlackRock’s commitment to diversifying its offerings and expanding its footprint in private markets.

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BlackRock CEO Larry Fink underscored the importance of these acquisitions, saying, “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.”

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Why HPS?

HPS’s expertise and scale in the private-credit sector make it an attractive acquisition for BlackRock. Founded during the early stages of the private-credit boom, HPS has built a reputation for delivering innovative financing solutions to a broad range of clients. The firm’s leadership in the sector complements BlackRock’s existing capabilities, enabling the asset manager to offer more comprehensive solutions to institutional investors.

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By integrating HPS into its operations, BlackRock aims to strengthen its position in a market that continues to attract significant interest from institutional investors seeking higher returns in a low-interest-rate environment. The acquisition will also enhance BlackRock’s ability to meet growing demand for private financing solutions amid a shift away from traditional bank lending.

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The acquisition aligns with BlackRock’s long-term vision of becoming a dominant force in the private-credit market. As regulatory pressures and market forces continue to reshape global finance, private credit has emerged as one of the fastest-growing areas in asset management. BlackRock’s strategy of acquiring well-established firms like HPS and GIP positions it to capture a larger share of this lucrative market.

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Fink’s statement highlights the firm’s adaptability and forward-thinking approach: “BlackRock has always evolved alongside the capital markets. These acquisitions reinforce our commitment to private markets, ensuring we remain a trusted partner for clients seeking innovative financing solutions.”

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Conclusion

BlackRock’s $12 billion takeover of HPS Investment Partners marks a significant step in its expansion into private credit. By leveraging HPS’s expertise and scale, BlackRock aims to solidify its leadership in a market that is poised for exponential growth.

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This latest acquisition reflects BlackRock’s broader strategy of enhancing its private market capabilities and diversifying its portfolio. As the private-credit market continues to evolve, BlackRock’s partnership with HPS positions it to remain at the forefront of this transformative sector.

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