BLACKROCK is in advanced talks to buy HPS Investment Partners, emerging as the only suitor in active talks with the firm as the world’s largest asset manager seeks to compete in the fast-growing private credit industry.
The two sides are seeking to reach an agreement by the end of this year, according to sources with knowledge of the discussions, who sought anonymity to discuss confidential matters. HPS could still opt for an initial public offering (IPO) or minority stake sale if the parties fail to agree on valuation, some of the sources said.
HPS would aim for a post-IPO valuation of US$11 billion, and for a sale, it would seek a premium to that, the sources said. A deal would leave BlackRock, which managed US$11.5 trillion at the end of the third quarter, with more than US$500 billion in alternative assets.
While negotiations are progressing, a deal has not yet been reached, and talks could conclude without an agreement, some of the sources said. BlackRock declined to comment. HPS did not immediately respond to a request for comment.
Chief executive officer Larry Fink has moved aggressively to expand his firm’s footprint in private markets, and buying HPS would mean BlackRock has clinched the two largest-ever acquisitions of alternative asset managers in the space of roughly 10 months. BlackRock is seeking to replicate its dominant scale in stock and bond markets in private assets, which are increasingly sought by pensions, insurers, sovereign wealth funds and wealthy retail clients.
Several weeks ago, the company completed a US$12.5 billion acquisition of Global Infrastructure Partners, making BlackRock into the second-largest manager of infrastructure assets. It’s already in the final stages of closing a £2.55 billion (S$4.4 billion) deal for private-markets data provider Preqin, which Fink has said will help the company “index the private markets” and lay the groundwork for ETFs to be tied to alternative assets.
HPS manages more than US$100 billion, making it one of the largest independent managers in the surging private credit market. That’s been pegged at US$1.7 trillion, but proponents say the market encompasses a broader range of assets and could grow to between US$20 trillion and US$40 trillion.
Founded in 2007 by Scott Kapnick, Scot French and Mike Patterson, the firm bought itself out of JPMorgan in 2016, a complicated deal that valued it at close to US$1 billion. BLOOMBERG
