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BlackRock has agreed to buy HPS Investment Partners in a $12bn deal, as the world’s largest money manager races to expand its share of the fast-growing and lucrative market for alternative assets.
New York-based HPS is one of a handful of groups that dominate private credit, a market that has taken over swaths of corporate lending from traditional banks.
BlackRock has agreed to pay $9.3bn in stock when the deal closes and a further 2.9mn shares, now worth $3bn, in five years’ time, assuming HPS meets certain financial targets.
The deal is the latest move by BlackRock chief executive Larry Fink to accelerate the group’s expansion into alternative assets, moving the company further beyond equities and bonds.
“I am excited by what HPS and BlackRock can do together for our clients,” Fink said.
In October, it completed the $12.5bn acquisition of infrastructure investment firm Global Infrastructure Partners. It has also agreed a deal to purchase Preqin, a UK private markets data group, for £2.55bn.
Private credit funds have attracted hundreds of billions of dollars in recent years, with insurers and pensions clamouring for the higher yielding investments.
BlackRock’s drive into alternative assets has put it into direct competition with the biggest alternative asset managers, including KKR, Blackstone and Apollo. HPS’s $148bn in assets under management would boost BlackRock’s total in alternatives to nearly $600bn.
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