In BlackRock’s latest move to bolster its private market offerings, the asset manager has acquired credit manager HPS Investment Partners for $12 billion in an all-stock transaction, marking another deal in a rush of GP consolidation.
According to PitchBook’s Public PE and GP roundup, GP-to-GP consolidation has accounted for a significant portion of M&A deal activity this year, with deal volume increasing by 93.8% YoY—an all-time high, even before the year is complete. With the HPS deal, the increase is nearly threefold.
BlackRock’s acquisition creates a combined private credit business that holds $220 billion in client assets, which will be led by the HPS team. The impending deal was first reported by The Financial Times.
The acquisition positions BlackRock’s credit business to surpass the size of Carlyle’s and compete with other publicly traded managers, including KKR and Apollo, according to Bloomberg. The firm said it expects the private debt market to more than double to $4.5 trillion by 2030.
Additionally, the combined businesses will work alongside BlackRock’s public fixed income division to provide both public and private solutions, with capabilities to invest across senior and junior credit, asset-based finance, real estate, private placements and CLOs.
Larry Fink, chairman and CEO of BlackRock, spoke to the convergence of public and private markets in the firm’s Q3 earnings call. “Private markets are becoming increasingly important in the financing of the economy,” he said.
He added that growing public deficits will expand the role of private markets in powering economic growth: “These dynamics are reshaping the landscape of how our clients invest and how they allocate capital within their portfolios.”
BlackRock has been actively pursuing inorganic growth and in October completed its approximately $12.5 billion acquisition of Global Infrastructure Partners. The infrastructure investor specializes in sectors including energy, transport and digital infrastructure.
Founded in 2007 by Scott Kapnick, along with Scot French and Michael Patterson, HPS Investment Partners originally functioned as a division within J.P. Morgan Asset Management, specializing in credit and long-dated investment opportunities.
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