(Reuters) – BlackRock (NYSE:BLK) will buy private credit firm HPS Investment Partners for about $12 billion in an all-stock deal, the companies said on Tuesday, as the world’s largest asset manager seeks to expand in a red-hot market.
Private credit, or lending to companies by institutions other than banks, has grown rapidly in recent years as stricter regulations made it more expensive for traditional lenders to finance riskier loans.
The asset class is expected to grow to $2.6 trillion by 2029 from $1.5 trillion at 2023-end, as per Preqin data.
BlackRock, which manages $11.5 trillion in assets, has an existing $85 billion private credit platform as of Sept. 30.
CEO Larry Fink has previously outlined private credit to be a “primary growth driver” within alternatives for BlackRock in coming years.
HPS was founded in 2007 as a division of Highbridge Capital Management, the hedge fund unit of JPMorgan’s asset management arm. In 2016, top HPS executives acquired the firm from JPMorgan.
Since then, HPS has become a massive private credit player, with assets under management vaulting to about $148 billion as of September from $34 billion in 2016.
For BlackRock, “it’s important to grow alternatives to gain a presence in the rapidly growing space,” said Cathy Seifert, an analyst at CFRA Research, ahead of the deal announcement.
The deal is expected to close in mid-2025.