BlackRock Inc., the world's largest asset manager, has announced its acquisition of HPS Investment Partners in an all-stock deal valued at approximately $12 billion. This strategic move is aimed at bolstering BlackRock's presence in the rapidly growing private credit market. The acquisition is expected to close in mid-2025, pending regulatory approvals.

HPS Investment Partners, a global credit investment manager with $148 billion in client assets, will join forces with BlackRock to create an integrated private credit franchise managing around $220 billion. This deal positions BlackRock to become a formidable player in the private credit sector, a market that is projected to grow significantly in the coming years.

Larry Fink, CEO of BlackRock, emphasized the importance of private credit as a primary growth driver for the firm. He stated that the acquisition would allow BlackRock to deliver comprehensive solutions that blend public and private markets, enhancing their offerings to clients.

The acquisition of HPS is part of BlackRock's broader strategy to expand its alternative investment capabilities. Earlier this year, BlackRock completed the acquisition of Global Infrastructure Partners for $12.5 billion and is in the process of acquiring private markets data provider Preqin for $3.2 billion.

HPS, founded in 2007 and formerly a division of JPMorgan's Highbridge Capital Management, has grown significantly since its management buyout in 2016. The firm has become a major player in the private credit market, with assets under management increasing from $34 billion in 2016 to $148 billion as of September 2024.

The deal is expected to increase BlackRock's private markets fee-paying assets under management by 40% and management fees by 35%. It will also enhance BlackRock's ability to serve its insurance clients, with HPS's expertise in private credit solutions.

This acquisition marks another milestone in BlackRock's transformation into a leading provider of private financing solutions, catering to a diverse range of clients including pensions, insurers, sovereign wealth funds, and wealthy individuals. The combined entity will offer a wide array of credit solutions, including senior and junior credit, asset-based finance, real estate, and collateralized loan obligations.

The transaction is structured to ensure leadership continuity, with HPS founders Scott Kapnick, Scot French, and Michael Patterson leading the new private financing solutions business unit within BlackRock. This strategic alignment is expected to create significant long-term value for BlackRock's shareholders and clients alike.