BlackRock, the world’s largest asset manager, has agreed to acquire HPS Investment Partners for US$12 billion in an all-stock deal, accelerating its expansion into the private credit market. The acquisition, announced Tuesday, underscores CEO Larry Fink’s strategy to diversify the company’s offerings beyond traditional stocks and bonds.

HPS is a New York-based private credit management company with $148 billion in customer assets under management, specializing in providing customized financing solutions to businesses, including high-yield loans and asset-based financing. The agreement will combine HPS’ operations with BlackRock’s existing private credit division, creating a unified platform that will manage approximately US$220 billion in assets.

“We have always strived to stay ahead of our customers’ needs,” says Fink. “Together with the scale, capabilities and expertise of the HPS team, BlackRock provides a solution that seamlessly blends public and private markets.”

Expanding your options

The deal is the latest in a series of moves by BlackRock to strengthen its position in alternative assets. Earlier this year, the company completed a US$12.5 billion acquisition of Global Infrastructure Partners and a US$3.2 billion deal with private market data provider Preqin.

Following the HPS acquisition, BlackRock’s alternative assets under management will approach $600 billion, increasing competition from peers such as KKR, Blackstone and Apollo Global Management.

HPS CEO Scott Kapnick and co-founders Scott French and Michael Patterson will lead the new private finance solutions division and join BlackRock’s executive committee.

Mr. Kapnick described the partnership as “a milestone in our company’s commitment to becoming the world’s leading provider of private financial solutions.”

Market background

Private credit is emerging as a fast-growing sector, with the market expected to more than double to US$4.5 trillion by 2030, according to BlackRock. Insurance companies and pension funds are increasingly paying attention to this sector due to its high yield compared to traditional bonds. HPS’s expertise will enable BlackRock to serve clients seeking long-term investment solutions.

The transaction is expected to close in mid-2025 and will include the issuance of up to 13.7 million BlackRock shares, with 9.2 million units to be exchanged upon closing and additional shares contingent on HPS achieving performance targets. Issued. BlackRock will also assume or refinance $400 million in HPS debt as part of the transaction.

BlackRock stock is currently down 0.28% at $54.33. Year-to-date, it has increased by 104.06%.