Blackrock, the world’s largest asset manager, is poised to acquire HPS Investment Partners for approximately 12 billion dollars, according to the Financial Times. The deal underscores BlackRock’s strategic push to expand its private credit business in a highly competitive market.
New York-headquartered HPS Investment Partners also operates from Luxembourg, where it is registered as HPS Investment Partners Lux Sàrl, as well as other European offices in Munich and London. The firm, which manages some 148 billion in assets, has a global presence.
The acquisition follows a series of discussions, with both sides having agreed on the broad framework of the deal, according to the FT. The official announcement is expected after the US Thanksgiving holiday, the newspaper said.
A spokesman for Blackrock in Amsterdam declined to comment on the report. “We do not comment on market rumours,” he said.
IPO was originally planned
HPS had previously considered an initial public offering earlier this year, which would have valued the private credit manager at around 10 billion dollars. However, the sale to Blackrock is anticipated to command a significant premium, the FT reported, reflecting HPS’s record-breaking fundraising capabilities, including 21.1 billion dollars raised for its latest private credit fund in June.
The acquisition would align with Blackrock’s recent initiatives to bolster its alternative investment platform. In recent months, the firm has been on an acquisition spree, including its 12.5 billion dollar purchase of Global Infrastructure Partners and a 3 billion dollar deal for private market data provider Preqin.
As private credit continues to grow in importance within the asset management industry, a Blackrock acquisition of HPS would position it to compete more aggressively with established players such as Ares and Apollo, which also are active in Luxembourg.
According to a Luxembourg filing, the firm’s Grand Duchy unit reported a net profit of 365,343 euro for 2023, about half of what it earned in 2022, while turnover rose to 12.98 million from 11.15 million in the previous year.
Luxembourg as top private credit hub
Luxembourg, together with the Cayman Islands, in recent years has emerged as a top international domicile for private credit funds, according to 2023 research by the Alternative Credit Council (ACC) and law firm Dechert LLP. The US, Ireland and UK were the next most popular fund domiciles amongst respondents to the 2023 ACC survey.
The Luxembourg Reserved Alternative Investment Fund (Raif) in recent years has emerged as the preferred vehicle to invest in EU-based private credit assets.