BlackRock has agreed to acquire credit investment manager HPS Investment Partners in an all-equity transaction valued at approximately $12bn.
According to the terms of the definitive agreement, BlackRock will issue 12.1 million equity units, referred to as SubCo Units, to take full ownership of HPS’s business and assets.
Of this, around 9.2 million units will be issued at closing, while the remaining 2.9 million units will be deferred for five years, subject to post-closing conditions.
An additional 1.6 million units may be issued based on financial performance milestones, also payable after five years.
The total deal consideration also includes an equity retention pool worth up to $675m for HPS employees, while BlackRock will retire or refinance around $400m of HPS’s existing debt.
Established in 2007, HPS offers a differentiated origination platform that covers both sponsor and non-sponsor channels. Supported by a scalable and flexible capital base, the firm provides companies with a broad array of tailored financing solutions.
HPS CEO Scott Kapnick said: “Our partnership with BlackRock will further strengthen our position in this fast growing but increasingly competitive market.
“The combination of HPS’s proven culture of investment discipline with BlackRock’s global reach will allow us to seize new opportunities for our investors and employees and set us up for continued success for the next decade and beyond.”
Through the acquisition, BlackRock aims to bolster its private credit platform by integrating HPS’s $148bn client asset portfolio with BlackRock’s $3 trillion public fixed-income business.
In addition, the acquisition will enable BlackRock to connect companies of all sizes, from small and medium-sized businesses to large corporations, with financing for investments that boost economic growth and employment generation.
The combined platform will offer extensive capabilities across senior and junior credit solutions, asset-based financing, real estate, private placements, and collateralised loan obligations (CLOs).
It aims to deliver a comprehensive financing solution for alternative asset managers by integrating direct lending, fund finance, and BlackRock’s GP and LP solutions, including fund-of-funds, GP/LP secondaries, and co-investments.
The addition of HPS is also expected to make BlackRock a full-service, fiduciary provider of public-private asset management and technology solutions for insurance clients.
This unified approach will provide clients and borrowers with seamless access to a wide range of corporate and asset-based financing options, spanning investment-grade, non-investment-grade, and private credit, said BlackRock.
BlackRock chairman and CEO Laurence Fink said: “We have always sought to position ourselves ahead of our clients’ needs. Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private.”
Subject to regulatory approvals and customary conditions, the deal is expected to be completed in mid-2025.
For the transaction, Perella Weinberg Partners served as the lead financial adviser to BlackRock. J.P. Morgan Securities was lead financial adviser to HPS.
