BlackRock’s $12 Billion Acquisition of HPS Investment Partners
Deal Overview
Key facts:
Acquirer: BlackRock Inc (BLK)
Target: HPS Investment Partners
Total Transaction Size: $12 bn
Closed Date: July 1, 2025
Summary
On July 1, 2025, BlackRock completed its acquisition of the private credit giant, HPS Investment Partners. As HPS was a private company and thus didn’t float its shares on the stock market, BlackRock was able to acquire the firm through an initial issuance of approximately 9.2 million BlackRock shares to HPS partners, with an additional 2.9 million shares contingent on performance metrics over the following five years.
Company Details
Acquirer - BlackRock (BLK)
BlackRock was founded in 1988 by the current CEO, Larry Fink, and has built a formidable reputation in the asset management industry through its relentless innovation and strategic growth. Its market valuation at the time of the acquisition was $161bn, and it consistently ranks in the Fortune 500 list.
BlackRock’s core products and services include the iShares family of exchange-traded funds (ETFs). ETFs are a type of investment fund that holds a basket of assets, such as stocks, bonds and commodities, and are traded on stock exchanges. BlackRock’s ETFs position the firm as one of the world’s biggest index fund managers, alongside major competitors Vanguard, State Street and Fidelity. BlackRock also provides investment management services across multiple asset classes, including equities, fixed-income, alternatives, and multi-asset solutions.
BlackRock originally began as a fixed-income specialist that focused specifically on risk management. The company evolved from managing bonds to becoming a more diversified investment platform. By 1999, BlackRock released the software programme Aladdin. The proprietary Aladdin software platform is one of BlackRock’s most distinctive assets, functioning as an investment and risk management system that monitors over $20tn in assets. For BlackRock, Aladdin provides a significant competitive advantage by enabling superior risk oversight at a scale no rival can match, cementing its position as the most technologically sophisticated asset manager in the world. Aladdin is an early example of ‘FinTech’, and one of the pioneering software programmes for the abrupt rise in financial tech after the 2008 market crash. BlackRock’s acquisition of Barclays Global Investors in 2009 granted them access to the iShares ETFs and enabled them to bring them to their platform. This move transformed BlackRock into a leader in the passive investing market. BlackRock’s iShares ETFs are the world’s largest ETF franchise by assets under management, offering over 1,300 funds across more than 30 countries, a breadth and scale that rivals Vanguard and State Street. Since then, BlackRock has been expanding into private markets and alternative investments, as is evidenced by this acquisition of HPS Investment Partners. BlackRock’s competition primarily consists of the afore-mentioned ETF rivals of Vanguard and State Street, as well as the giants in the asset management space, most notably KKR, Ares, Blackstone and Apollo Management, many of which have built larger private credit platforms than BlackRock has.
BlackRock utilises the extensive resources granted by its ownership of the Aladdin software platform, which oversees $21tn in assets for over 1,000 clients, as well as a $3tn fixed income platform. BlackRock didn’t always have such expansive resources. Back in 1988, the firm was granted $5mn in initial funding but managed to reach $900mn for its IPO valuation in 1999. Their 2006 acquisition of Merrill Lynch Investment Managers also significantly increased their scale and distribution.
Major setbacks and issues that BlackRock has faced in its tumultuous life include when it was retained by the U.S. Treasury during the 2008 financial crisis, tasked with analysing toxic assets, a role that drew both influence and scrutiny. Another setback occurred when, between October and December of 2018, BlackRock’s assets dropped by $468bn, falling below $6tn and marking their biggest quarterly loss since September 2011. This founding story is significant because it shaped BlackRock’s identity. Fink’s personal experience of catastrophic risk management failure motivated him to build a firm where technology-driven risk control would be prioritised as the foundation of every investment decision. Following Larry Fink’s $90mn loss at First Boston, the company built its entire business model around superior risk management, with the method of achieving this being superior technology and its implementation of it.
Major developments in the asset management industry, such as technological advancements with algorithmic trading, robo-advisors and AI-driven portfolio tools, have dramatically lowered the cost of passive investment products and made them accessible to a far broader investor base, aiding the large shift towards passive investments and the use of ETFs. Passive investments are designed to track a market index, such as the S&P 500, rather than relying on active stock-picking, offering lower fees and broad market exposure. Environmental social governance investing has become a major industry focus, but also a growing controversy and one that BlackRock itself has been the subject of with its accusations of ‘greenwashing’. Environmental, social and governance (ESG) investing refers to the practice of incorporating a company’s ethical impact, environmental footprint and corporate governance standards into investment decisions, alongside traditional financial metrics. Greenwashing refers to when a company overstates or misrepresents the environmental credentials of its products to attract ESG-conscious investors. BlackRock has faced specific accusations of this, most notably when it was revealed that, despite publicly championing ESG principles, BlackRock continued to be one of the world’s largest investors in fossil fuel companies, including coal producers. Critics also pointed to inconsistencies between BlackRock’s stated voting policies on climate resolutions and its actual voting record at shareholder meetings. The boom of private markets themselves has driven asset managers to expand beyond public securities into private credit, infrastructure, and alternative investments: as can be observed with BlackRock’s decision to acquire HPS.
Target - HPS Investment Partners (HPS)
HPS is a private credit management firm and was founded in 2007 by the current CEO, Scott Kapnick, alongside Scot French and Michael Patterson. HPS has a strong international reputation for its analytical rigour and tailored capital solutions. HPS’s headquarters are situated in New York City, and as of September 2024, they managed approximately $148bn of client assets.
HPS’s core products and services include their specialty in alternative credit solutions across the capital structure. They provide corporate-focused private credit, including senior direct lending and junior capital solutions, asset-based financing, real estate credit and liquid credit strategies. HPS has invested nearly $203bn in private credit transactions across more than 1000 companies since its founding in 2007. HPS’s main clients include pension funds, insurance companies, endowments and sovereign wealth funds.
HPS was initially founded as part of J.P. Morgan Asset Management to invest in alternative investment asset classes. The firm launched its first liquid credit strategy in 2008 during the financial crisis and then introduced its junior private credit strategy. The timing of HPS’s founding in 2007, on the eve of the financial crisis, was not coincidental. The 2008 crash created a significant void in corporate lending as traditional banks retrenched under regulatory pressure, and HPS was specifically positioned to fill that gap, providing flexible capital to companies that could no longer access bank financing. Later, HPS introduced its ‘Specialty Direct Lending’ strategy, which focused on complex situations. HPS then went on to expand from its sponsor-backed lending to non-sponsor direct lending, which granted them access to less competitive market segments.
By 2023, HPS had grown its workforce to over 760 employees across the globe, with offices based in New York and London. HPS strives to position itself as a global company and has done so since its inception. HPS operates with a scaled and flexible capital base, enabling it to commit to large transactions. This is evidenced by their status as having led one of the earliest private credit deals, with an over $1bn tranche size.
A major milestone of HPS’ operations was when it surpassed $100bn in assets under management, making it one of the fastest alternative asset managers to reach this landmark. In 2018, Dyal Capital bought a minority investment in the firm to promote growth. They later increased this in 2024 and advanced their strategic partnership by placing $30bn of assets under HPS’ management. HPS confidentially filed for an IPO in December 2023, but ultimately withdrew due to the unfavourable market conditions.
Major developments in the private credit industry include its rapid growth, expanding from approximately $250bn in 2008 to nearly $2tn by 2024, with some sources such as Morgan Stanley citing projections of reaching around $5tn by 2029. The industry has seen significant consolidation, with larger funds capturing the majority of the growth. Competition within the industry has intensified because traditional asset managers, like their acquirer BlackRock, have been buying private credit firms, and banks have been forming partnerships with such firms.
HPS was forced to navigate the Citigroup lawsuit in 2020, over a mistaken $900mn payment to Revlon Lenders. HPS initially lost the lawsuit, but it was overruled in their favour in 2022. HPS differentiates itself through its specialisation in complex, distressed and bespoke credit situations that larger generalist funds typically avoid, alongside its ability to deploy significant capital in a single transaction. HPS emphasises its differentiation in a highly competitive and oversaturated market and highlights its unique expertise for distressed situations and significant capital capacity for large transactions. HPS ultimately chose to be acquired by BlackRock because of the access to global scale that it provides.
HPS’ main competitors are the market leaders in the private credit industry, those being Blackstone, Blue Owl Capital Group, KKR and Apollo Management. For example, Blackstone’s credit arm manages over $300bn, more than double HPS’s AUM, illustrating the scale gap HPS faced as an independent firm and the strategic logic of aligning with BlackRock’s global platform. HPS also has the growing competitive threat of banks’ own asset management firms, such as Goldman Sachs Asset Management.
The Acquisition
Transaction Details
HPS Investment Partners achieved their valuation of $12bn, which was 30x price/ fee-related earnings, roughly a 25% premium. The deal also specified that BlackRock must pay off HPS’ outstanding debt of $400mn in the form of refinancing or retirement.
The acquisition and transaction were signed and publicly announced on the same day, December 3 2024. As HPS was a private company, BlackRock could acquire it without having to pay premiums on shares to existing shareholders. However, the valuation of $12bn was arrived upon for HPS, giving it a 30x price/earnings valuation. The transaction itself was 100% equity, using SubCo units that were exchangeable for BlackRock stock. Additional costs for the acquirer included the obligation to pay off $400mn of HPS’ existing debt, either in the form of retirement or refinancing. The new combined firm had over $220bn in client assets under management and a much more versatile profile to deal with the rapidly expanding asset management industry.
Motivation
BlackRock’s Motives
Determined not to miss the surge in the private assets market, Larry Fink has pursued strategic acquisitions to remain ahead of competitors and continue to strengthen BlackRock’s market position. BlackRock recognises that while it dominated public markets with index funds and ETFs, the future growth and opportunity lie in higher-fee investments. Therefore, the firm needed to scale its private market capabilities to compete with its booming competitors.
BlackRock faced persistent margin pressure from its core index fund business because fierce competition drove fees to extremely low levels. BlackRock anticipated the traditional private credit market would more than double to over $4.5tn by 2030, representing a massive revenue opportunity. The HPS acquisition would increase private markets fee-paying assets and management fees by 40% and approximately 35%, respectively, providing access to the lucrative private credit sector where fees significantly exceed those of passive index products. HPS is a leading independent provider of private credit for insurance clients, and the addition of HPS would position BlackRock to be a full-service, fiduciary provider of public-private asset management and technology solutions for insurance clients. BlackRock already managed $700bn for insurance clients and had 100 insurance clients using Aladdin technology, making this a natural extension to deepen those relationships.
Following the planned acquisition of HPS, BlackRock expected its alternatives platform to become a top-five provider for clients, with $600bn in client assets and over $3bn in annual revenue. This would vault BlackRock into the upper echelon of alternative asset managers, alongside the private equity giants.
HPS Investment Partners’ Motives
Scott Kapnick stated that the partnership with BlackRock would further strengthen HPS's position in a fast-growing but increasingly competitive market. As a mid-sized independent firm managing $148bn, HPS faced mounting pressure from both larger integrated platforms and well-capitalized competitors. This pressure stemmed from a combination of factors: institutional clients increasingly preferred managers with the scale to offer diversified platforms, legacy fund structures were becoming harder to grow without public capital, and HPS’s independent status made it more vulnerable to talent retention challenges against better-capitalised rivals. The private credit market was consolidating, with scale becoming increasingly important for winning large deals and maintaining margins. Private equity and alternative asset manager IPOs have historically underperformed post-listing, as public market investors struggle to value illiquid, fee-dependent business models. This was particularly evident following the underwhelming IPOs of firms like Apollo and KKR in their early public market debuts, where share prices struggled to reflect the true value of their long-term investment strategies. For HPS’s founders, a trade sale to BlackRock therefore represented a more reliable and immediate path to full valuation. HPS founding partner Michael Patterson confirmed they came very close to going public, even holding meetings with well-respected mutual funds as potential investors in their initial public offerings (IPO’s). Sources revealed that HPS first sought to go public, which caught BlackRock's attention as it looked to grow its alternative assets business. However, private equity IPOs had faced challenging market conditions with poor post-IPO performance from comparable firms, making a strategic sale to BlackRock more attractive than an uncertain public market reception.
The combination of HPS's proven culture of investment discipline with BlackRock's global reach would allow the firm to seize new opportunities for investors and employees. The combined entity would set both up for continued success for the next decade and beyond. HPS recognized that BlackRock's massive global distribution network, institutional relationships spanning over 100 countries and brand recognition would open doors that could have taken HPS decades to build independently.
Integration
The transaction structure ensured HPS founders would lead the combined private credit business, join BlackRock's Global Executive Committee and Scott Kapnick would serve as an observer to BlackRock's Board of Directors. HPS's flagship strategies would maintain their HPS branding, and the business would be known as HPS, a subsidiary of BlackRock. This preservation of identity and leadership autonomy addressed concerns about losing the entrepreneurial culture that drove HPS's success. HPS's entrepreneurial culture was built on several distinctive pillars that set it apart from larger, more bureaucratic asset managers: a flat decision-making structure that allowed senior investment professionals to act quickly on complex credit opportunities, a strong emphasis on intellectual ownership where individual portfolio managers retained meaningful autonomy over their strategies, and a performance-driven ethos that attracted and retained talent through carried interest and direct alignment with investment outcomes. These qualities were precisely what made HPS valuable and precisely what was at risk in a combination with a firm of BlackRock's scale and institutional complexity. The concern was not merely cultural friction, but the possibility that the speed and conviction required for distressed and bespoke credit investing would be diluted by layers of corporate oversight.
Looking ahead, integration risk on this front remains a live concern. The key structural safeguard is that HPS's flagship strategies, Strategic Investment Partners, Specialty Loan Fund, Core Senior Lending Fund and Corporate Lending Fund will retain their HPS branding and continue to be managed by the existing HPS leadership team. Scott Kapnick's appointment to BlackRock's Global Executive Committee and his observer role on the Board further reinforce HPS's seat at the table. Whether these protections prove sufficient will depend on how much operational independence BlackRock extends in practice, particularly as pressure to cross-sell and integrate with Aladdin's infrastructure grows over time.
Legal Contentions and Regulatory Impact
The transaction required approval from several regulatory bodies, including the expiration of the waiting period, under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. The Hart-Scott-Rodino Act required both parties to file premerger notification forms with the Federal Trade Commission and the Department of Justice. Under typical HSR procedures, parties must wait a 30-day period in which regulatory agencies can request further information to assess whether the proposed transaction violates antitrust laws. These agencies evaluated whether or not the combined entity would create anti-competitive effects in the private credit market. Additionally, the transaction required approval from the European Commission due to both corporations’ global operations in European markets. The European Commission approved the acquisition under the EU Merger Regulation on April 3, 2025. This cleared a major regulatory hurdle for the international aspects of the transaction.
As part of closing the transaction, BlackRock expected to retire for cash or refinance approximately $400mn of existing HPS debt. This created legal obligations related to debt covenants, creditor rights and potential change-of-control provisions in existing HPS financing arrangements. The transaction required navigating legal issues around client contracts, investment mandates and fund documentation. HPS's flagship strategies, including Strategic Investment Partners, Specialty Loan Fund, Core Senior Lending Fund and Corporate Lending Fund, would maintain their HPS branding. This required legal mechanisms to preserve investment vehicles while integrating operations.
An unusual complication arose from BlackRock’s ongoing dispute with the Federal Deposit Insurance Corporation (FDIC) over its stakes in U.S. banks. The FDIC wanted BlackRock to sign a passivity agreement to comply with new oversight of its stakes in FDIC-regulated banks, with concerns centring on BlackRock’s substantial passive shareholdings in thousands of U.S. banks. Regulators worried that even without active voting, the sheer scale of BlackRock’s ownership could exert implicit influence over bank strategy, lending behaviour and executive decision-making. This issue was particularly significant because both Republican and Democratic FDIC board members expressed concerns about large asset managers’ potential influence over banks, and throughout 2024, BlackRock resisted the FDIC’s push for greater oversight, denying that it exerts undue control over companies through its investment stewardship activities. The passivity agreement deadline was initially set for 10th January 2025 and later extended to February 10, 2025. While the HPS acquisition ultimately closed without apparent interference from this dispute, the timing created regulatory uncertainty during the deal process.
Industry Impact
The acquisition created the fifth-largest private credit platform globally, with approximately $220bn in combined client assets. Antitrust regulators likely evaluated whether this concentration would reduce competition in private credit markets, particularly in middle-market lending, direct lending, and asset-based finance sectors where both firms operated. Scott Kapnick, HPS's CEO, became an observer to the BlackRock Board of Directors, while he, Scot French and Michael Patterson joined BlackRock's Global Executive Committee. This governance structure raised questions about information sharing, conflicts of interest management and fiduciary duties, which required legal structuring and compliance frameworks.
The combined entity faces ongoing legal/regulatory responsibilities to meet separate compliance obligations. This includes maintaining compliance under the Investment Advisers Act and addressing the regulations from their investments in banks, under the Bank Holding Company Act. Furthermore, they are obliged to coordinate regulatory examinations across multiple jurisdictions. While the acquisition received necessary approvals, the legal landscape remains complex. Federal and state antitrust authorities can challenge transactions even after approval or if deals were not reportable under HSR. The private credit industry’s rapid consolidation and BlackRock’s size may invite continued regulatory scrutiny from the Federal Trade Commission (FTC), Department of Justice (DOJ), Securities and Exchange Commission (SEC), and banking regulators.
The governance structure raised specific red flags for several reasons. Kapnick's role as a board observer rather than a full director means HPS leadership has visibility into BlackRock's strategic decisions without formal voting rights or fiduciary accountability at the parent level. Critics noted that this creates an asymmetric arrangement: HPS founders benefit from BlackRock's platform and liquidity while remaining insulated from full governance obligations. Additionally, the use of SubCo units exchangeable for BlackRock stock introduces a multi-class economic structure that complicates standard shareholder alignment. Compared to peers, this stands out: when Apollo and KKR brought in external acquisitions, those targets were more fully absorbed into the parent governance framework, with leadership either joining the board outright or exiting. BlackRock's hybrid arrangement is more unusual and warrants continued scrutiny.
More broadly, this transaction may serve as a governance template for future private credit consolidation. As more alternative asset managers are absorbed by large public platforms, the industry will need clearer standards around how acquired firms' leadership participates in and is accountable to parent company governance. Regulators, particularly the SEC and FDIC, have already signalled interest in how conflicts of interest are managed within these hybrid structures. If this deal performs well, its governance model may be widely replicated; if conflicts emerge, it could prompt formal rulemaking that reshapes how such acquisitions are structured across the private credit industry.
House View
BlackRock’s acquisition of HPS Investment Partners represents one of the most strategically significant deals in the asset management industry in recent years. In our view, this deal was not only well-timed but well-constructed, and its implications extend well beyond the two firms involved.
The broader context is that private credit has been one of the fastest-growing asset classes of the past decade, expanding from approximately $250bn in 2008 to nearly $2tn by 2024. Traditional bank lending has retrenched under post-2008 regulatory pressure, leaving a financing gap that alternative asset managers have moved decisively to fill. BlackRock, for all its dominance in public markets, had a comparatively modest footprint in this space. The acquisition of HPS addresses that gap in one move, adding $148bn in private credit assets under management, and crucially, a highly regarded team with deep expertise in complex and distressed credit situations. Rather than attempting to build this capability organically, a process that would have taken years and carried significant execution risk, BlackRock has effectively purchased both the platform and the talent in a single transaction.
Looking forward, we believe this deal will prove to be well-timed relative to the broader industry cycle. Private credit is entering a phase of consolidation, with institutional investors increasingly favouring large, diversified platforms over specialist boutiques. Pension funds, sovereign wealth funds and insurance companies, the core clients of both BlackRock and HPS, are demanding more integrated solutions that span public and private markets. The combined entity is exceptionally well-positioned to meet that demand. BlackRock’s Aladdin platform, its global distribution network spanning over 100 countries, and its institutional relationships provide HPS strategies with a reach that would have taken decades to build independently.
There are, of course, risks worth monitoring. Integration of cultures and investment teams in asset management is notoriously difficult, and HPS’s performance has historically been tied to the continuity of its founding leadership. The decision to retain HPS’ branding and allow Scott Kapnick’s team to lead the combined private credit business is a sensible structural choice that should mitigate this risk. Nevertheless, the long-term success of the deal will ultimately depend on whether that talent remains engaged within a much larger corporate structure.
We view the acquisition as a net positive for BlackRock’s shareholders, HPS’s clients, and the firm’s long-term competitive positioning. It accelerates a strategic pivot that was already underway, and cements BlackRock’s status as not only the world’s largest asset manager, but as one of the most comprehensively positioned. For the broader industry, this deal will likely be remembered as a marker of the moment when the lines between traditional and alternative asset management definitively began to blur.
References
BlackRock, Inc. (2024, December 3). BlackRock to acquire HPS Investment Partners to deliver integrated solutions across public and private markets. [Press release]. Available at: https://ir.blackrock.com/news-and-events/press-releases/press-releases-details/2024/BlackRock-to-Acquire-HPS-Investment-Partners-to-Deliver-Integrated-Solutions-Across-Public-and-Private-Markets/default.aspx
Wikipedia. (2025). BlackRock. [online]. Available at: https://en.wikipedia.org/wiki/BlackRock
Wikipedia. (2025). HPS Investment Partners. [online]. Available at: https://en.wikipedia.org/wiki/HPS_Investment_Partners
Bary, E. (2022, September 8). Citigroup wins appeal over accidental $900 million Revlon wire transfer. CNBC. [online]. Available at: https://www.cnbc.com/2022/09/08/citigroup-wins-appeal-over-mistaken-revlon-wire-transfer.html
BlackRock, Inc. (2024, December 3). BlackRock to acquire HPS Investment Partners to deliver integrated solutions across public and private markets. [Press release]. Available at: https://ir.blackrock.com/news-and-events/press-releases/press-releases-details/2024/BlackRock-to-Acquire-HPS-Investment-Partners-to-Deliver-Integrated-Solutions-Across-Public-and-Private-Markets/default.aspx
Patterson, M. (2025, December 3). HPS founder confirms private credit giant almost IPO’d before BlackRock sale. InvestmentNews. [online]. Available at: https://www.investmentnews.com/alternatives/hps-founder-confirms-private-credit-giant-almost-ipod-before-blackrock-sale/263380
European Commission. (2025, April 3). Mergers: Commission approves acquisition of HPS by BlackRock (Case M.11839). [online]. Available at: https://competition-cases.ec.europa.eu/cases/M.11839
