BlackRock has reached a definitive agreement to acquire HPS Investment Partners for approximately $12bn, with 100 per cent of consideration paid in BlackRock equity.

The equity is issued by a wholly owned subsidiary of BlackRock (SubCo Units), and exchangeable on a one-for-one basis into BlackRock common stock.

HPS is a global credit investment manager that provides capital solutions across $148bn in client assets.

The merger will create an integrated private credit franchise with around $220bn in client assets.

BlackRock said that the future of fixed income was building public and private portfolios to optimise liquidity, yield, and diversification, and the transaction would bring together its corporate and asset owner relationships with HPS’s diversified origination and capital flexibility.

The combined private credit franchise will work with BlackRock’s public fixed income business to provide both public and private income solutions for clients across their whole portfolios.

BlackRock and HPS will form a new private financing solutions business unit led by Scott Kapnick, Scot French, and Michael Patterson, with all three joining BlackRock’s Global Executive Committee, while Kapnick will be an observer to the BlackRock Board of Directors.

“I am excited by what HPS and BlackRock can do together for our clients and look forward to welcoming Scott Kapnick, Scot French, and Michael Patterson, along with the entire HPS team, to BlackRock,” commented BlackRock chair and CEO, Laurance D. Fink.

“We have always sought to position ourselves ahead of our clients’ needs. Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private.

HPS CEO, Scott Kapnick, said: “Today marks an important milestone in our drive to become the world’s leading provider of private financing solutions.

“Our partnership with BlackRock will further strengthen our position in this fast growing but increasingly competitive market.

“The combination of HPS’s proven culture of investment discipline with BlackRock’s global reach will allow us to seize new opportunities for our investors and employees and set us up for continued success for the next decade and beyond.”

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