(Bloomberg) -- BlackRock Inc. is among firms exploring a purchase of HPS Investment Partners, according to people with knowledge of the matter, in a deal that would push the world’s biggest asset manager into the top ranks of the private-credit market.
The two firms have held talks as HPS also pursues a potential initial public offering, said the people, who requested anonymity to discuss confidential information. Such an IPO may value HPS at $10 billion or more, Bloomberg News has reported. An acquisition would likely require a premium to that valuation, some of the people said.
A deal hasn’t been reached and talks could conclude without an agreement, some of the people said.
“We do not comment on market rumors or speculation,” Ed Sweeney, a spokesperson for BlackRock, said in an emailed statement. A representative for HPS didn’t immediately respond to a request for comment.
BlackRock isn’t alone in holding talks with HPS as multiple potential suitors weigh preempting the firm’s IPO, some of the people said. Private equity firm CVC Capital Partners has been interested in a potential combination with HPS and has held on-and-off talks, but no formal negotiations are currently underway, people familiar with the matter said. CVC declined to comment.
BlackRock, like many rivals, is seeking to position itself as a one-stop shop for a full range of investing options, including alternative assets that are in greater demand by clients such as pensions and sovereign wealth funds. The company has already inked two deals this year to bulk up in alternative assets, and has flagged private credit as one of its top growth priorities.
Industry Surge
The rise of private credit has spurred several recent partnerships and acquisitions, including alternative asset manager Apollo Global Management Inc.’s agreement to team up with Citigroup Inc. on $25 billion worth of deals over the next five years. Last year, Apollo seized on weakness at Credit Suisse Group AG to buy its structured finance business, which has become an integral part of the firm’s plan to become a lending machine.
Lazard Inc. has also considered several opportunities to acquire a private-credit firm, as has the biggest US bank, JPMorgan Chase & Co. Last year, TPG Inc. agreed to buy credit firm Angelo Gordon for $2.7 billion.
HPS said in August that it was expanding a strategic partnership with Guardian Life Insurance Co. of America. The insurer acquired a minority stake in HPS in 2022 and agreed to provide capital to the credit firm.
Founded in 2007 by Scott Kapnick, Scot French and Mike Patterson, HPS is among the largest independent managers in the $1.7 trillion private-credit market and has come to epitomize the industry’s surge over the past several years. HPS managed $98 billion of assets in private credit and $19 billion in public credit at the end of June. In 2016, the firm bought itself out of JPMorgan in a complicated deal that valued it at close to $1 billion.
BlackRock, which managed about $10.6 trillion in client assets at midyear, last week said it completed its $12.5 billion acquisition of Global Infrastructure Partners. In June, it agreed to buy private-capital database provider Preqin. Led by Larry Fink, BlackRock manages roughly $86 billion in private debt strategies, including about $35 billion of direct lending assets.
But the New York-based company has lagged behind smaller rivals in the lucrative and growing world of private credit, seeing firms such as Apollo., Blackstone Inc., Ares Management Corp. and Blue Owl Capital Inc. dominate the business in recent years. In September, BlackRock shook up the senior leadership of its private-debt business.
--With assistance from Swetha Gopinath, Ryan Gould, Silla Brush, Jan-Henrik Förster, Silas Brown and Aaron Kirchfeld.
(Updates with context on private credit deals starting in seventh paragraph.)
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