HPS has about $148 billion in assets under management, $123 billion in private credit assets and about $22 billion in public credit AUM. Its more than 760 employees are based across 14 global offices. The firm was founded in 2007, and will continue to be led by its founders and long-term governing partners, including Scott Kapnick, Michael Patterson and Scot French.
Under the deal, BlackRock and HPS will form a new private financing solutions business unit, to be led by Kapnick, Patterson and French, a news release said. That platform will cover senior and junior credit solutions, asset-based finance, real estate, private placements, and collateralized loan obligations.
The new unit will also bring together direct lending, fund finance, and BlackRock's GP and LP solutions -- its fund of funds, GP/LP secondaries, and co-investments capabilities. Kapnick, Patterson and French will join BlackRock's global executive committee, and Kapnick will also be an observer on BlackRock's board of directors.
BlackRock U.K. Chair Sandy Boss said in a panel discussion at the Investment Association's Investment Horizons conference on Dec. 3 that the deal is "responding to clients' needs to look at private and public markets."
Increased fee-paying assets
The deal brings together BlackRock's corporate and asset owner relationships and HPS's origination and capital flexibility, the release added, noting that the combined private credit unit will work alongside BlackRock's $3 trillion public fixed-income business. It will also cater to BlackRock's insurance clients, the release said.
Kapnick said during the investor call that HPS has 120 insurance clients. Fink said that BlackRock manages over $700 billion in insurance assets and that the acquisition of HPS will bolster the ability to serve the insurance segment.
The HPS deal is expected to increase private markets fee-paying assets under management by 40%, and management fees by about 35%, BlackRock said. The deal is expected to close mid-next year, subject to regulatory approvals and closing conditions.
“We have always sought to position ourselves ahead of our clients’ needs," Fink, also chair of BlackRock, said in the release. "Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private."
HPS CEO Kapnick said during the investor call that the combination of the two firms creates “an asset manager of unparalleled breadth and scale" adding that they will be “a huge force in both the public and private markets shaping the next decade for… private financing solutions."
Kapnick pointed to areas he expects to see grow in the coming years.
“One of the things that investors and analysts like about HPS is our breadth across not only pension and sovereign wealth, insurance, and also retail. That wealth channel here and the opportunity to expand with BlackRock’s breadth is amazing,” he said. “The asset-backed lending platform, as we get into private IG is a big shift. We'll talk more about that in the years ahead. We're positioned to be a leader, if not the leader in that.”
Kapnick also said that HPS’s private data paired with the Aladdin platform and Preqin, a recent BlackRock acquisition, will create “additional power.”
Fink, speaking from Singapore, highlighted infrastructure debt as “a unique and very timely opportunity.”
Private debt at $4.5 trillion by 2030
The $11.48 trillion BlackRock expects the private debt market to more than double in assets by 2030 to $4.5 trillion. The firm has made a number of acquisitions recently in the private markets business, with Boss noting at the conference that the firm has been "quite busy in this area." Recent deals include a $12.5 billion deal for Global Infrastructure Partners.
BlackRock is also increasing its data capabilities in private markets, with Boss highlighting the prior deal to acquire U.K. data provider Preqin.
It's been an active year in private credit mergers and acquisitions as well as strategic partnerships.
Alternative manager Blue Owl Capital agreed acquire credit manager Atalaya Capital Management. Janus Henderson Group agreed to acquire a majority stake in global private credit manager Victory Park Capital Advisors. Clearlake Capital Group agreed to acquire European private credit specialist MV Credit from Natixis Investment Managers.
And in October, French investment firm Wendel Group agreed to take a $1 billion stake in private credit manager Monroe Capital.
