Dear Client,
This note is to inform you of our acquisition of HPS Investment Partners and to explain how this transaction fits into our broader strategy of serving you across private markets and your whole portfolio.
HPS Investment Partners (HPS) is a global leader in private credit investing, founded in 2007. We will combine HPS’ $148 billion in client assets with BlackRock’s $89 billion private debt platform to create a full-service offering in private credit—one of the fastest-growing areas in private markets globally. This combined platform will bring together BlackRock’s strong corporate and asset owner relationships with HPS’ diversified origination and capital flexibility. Together these businesses will form a new private financing solutions business unit. The combined business will present broad capabilities across senior and junior debt solutions, asset-based financing, real estate, leveraged loans, private placements, and sponsor-led direct lending. To work more closely with financial sponsors across their full financing needs, the unit will also include BlackRock’s GP solutions (Private Equity Partners), LP solutions (Secondaries and Liquidity Solutions), and our CLO platform. It will be led by Scott Kapnick, Michael Patterson, and Scot French of HPS.
At BlackRock, we pursue acquisitions with the goal of deepening our ability to serve clients across their whole portfolios. Many of our clients among insurers, pensions, sovereign wealth funds, and private wealth managers are seeking to invest more in private credit, making the sector one of the fastest growing pockets of client demand in private markets. We also see powerful structural drivers set to expand the private credit market. We expect direct lending as an asset class to double by the end of the decade, as trillions of dollars of lending will to migrate to where it can be done most efficiently.
To fulfill this need, we are excited to be joining forces with HPS. The combined business will add much greater scale — enabling us to provide more to investors and borrowers alike. HPS provides origination capabilities and borrower scale complementary to BlackRock’s existing direct lending business, which today operates largely in the core middle-market. At a portfolio level, HPS’ borrowers are primarily larger companies, with a higher EBITDA profile and average loan size than BlackRock’s direct lending franchise, and with a higher proportion of non-sponsor origination. The combined business will also bring into BlackRock a world-class investment leadership team with a reputation for investment excellence and business-building. Alongside our leading fixed income business across active, index, and ETF solutions, BlackRock will deepen our leadership in serving our clients across public and private fixed income and in financing companies, sovereigns, and borrowers worldwide.
The logic for HPS follows closely that for acquiring Global Infrastructure Partners (GIP) earlier this year. That combination brought new capabilities and scale to our infrastructure business, creating a platform with $170 billion in assets. As with private credit, we see structural drivers as powering demand for private infrastructure capital, including aging societies, fiscal constraints, constrained corporate balance sheets, the AI revolution, and the energy transition. We are already seeing mounting enthusiasm from our clients to work with us more closely across all themes, and from corporates eager to strengthen our financing relationships.
Our third acquisition of the past year in private markets, Preqin, also follows similar logic. With clients seeking to invest more in private markets, clients are seeking much more data about the private markets for investment decisions, capital formation, risk management, and portfolio construction. To meet this need, we are acquiring Preqin to expand our private markets data offering as part of our Aladdin business.
It’s been an exciting year at BlackRock as we develop deeper capabilities to serve you across your portfolio. We are grateful for your partnership and look forward to continuing to support your investment objectives.
