BlackRock, Inc. and HPS Investment Partners (HPS) announced the successful completion of BlackRock’s acquisition of HPS.

Private credit is reshaping financial markets and the structural trends supporting its growth have accelerated the convergence of public and private markets. Financing activity is being shifted toward the capital markets, positioning asset managers to match long-dated capital with long-term investors, including insurance companies, pensions, sovereign wealth funds, wealth managers, and individuals saving for retirement.

With the addition of HPS, BlackRock is now positioned to more fully meet the accelerating client demands resulting from this shift, providing clients and borrowers access to integrated, best-in-class solutions at scale. Operating alongside BlackRock’s $3 trillion public fixed income franchise, which includes the Fundamental Fixed Income business, led by Rick Rieder, as well as the Financial Institutions Group, led by Peter Gailliot, the addition of HPS’s capabilities into a combined platform allows BlackRock to stay ahead of market evolution and client needs, as they increasingly look past traditional distinctions of “public” and “private” in accessing credit markets.

To fully capture the opportunities created by this combination, BlackRock is creating Private Financing Solutions (PFS), which will combine the firms’ market-leading private credit, GP and LP solutions, and private and liquid CLO businesses into one integrated platform.

Together, PFS will advance BlackRock’s ability to create a more seamless experience for investors and borrowers, while offering a platform that is well equipped to identify and execute on a broad array of opportunities created by this market evolution. The combined PFS team will be led by Scott Kapnick, Scot French, and Michael Patterson. HPS’s flagship strategies, including HPS Strategic Investment Partners (SIP), HPS Specialty Loan Fund (SLF), HPS Core Senior Lending Fund (CSL), and HPS Corporate Lending Fund (HLEND), and other investment strategies, will maintain their HPS branding, and the HPS business will now be known as HPS, a part of BlackRock.

• Core to PFS will be an integrated private credit franchise with $190 billion in client assets and a platform to provide both public and private income solutions for clients.
• The GP/LP business plays an important role in helping private markets firms and investors navigate today’s market environment through capital formation and liquidity solutions. Aligning BlackRock and HPS’s existing GP/LP businesses within the PFS structure will allow the firm to deepen relationships with sponsors and investors, delivering bespoke solutions across the platform, and partnering to resolve their most pressing needs.

“BlackRock has always looked at the full breadth of our clients’ needs in everything we do. Through this combination, we are more strongly positioned to serve our clients, globally and locally, through our One BlackRock culture, with solutions that seamlessly blend public and private,” said Laurence D. Fink, BlackRock Chairman and CEO. “The creation of PFS means that we can answer far more client needs with far fewer calls, creating a comprehensive solutions provider for clients and borrowers alike. We are excited to realize the potential of this platform and thrilled to have Scott, Scot, Mike and the talented HPS team join us on this journey.”

“We are thrilled to join BlackRock and lift the HPS success story to a new level. Current opportunities in the private credit markets are enormous and successfully navigating them will require entrepreneurial drive, disciplined risk management, global reach and a powerful platform to originate the most compelling transactions. BlackRock Private Financing Solutions will deliver all these success factors to our clients, investors, shareholders and employees. We are ready and excited to hit the ground running,” said Scott Kapnick, Chief Executive Officer of HPS.

Scott Kapnick will be an observer to the BlackRock Board of Directors.

Perella Weinberg Partners LP served as lead financial advisor to BlackRock. Morgan Stanley & Co. LLC also served as financial advisor, with Skadden, Arps, Slate, Meagher & Flom LLP and Clifford Chance LLP acting as legal counsel. J.P. Morgan Securities LLC served as lead financial advisor to HPS, with Goldman Sachs & Co. LLC, BofA Securities, Inc., Deutsche Bank Securities Inc., BNP Paribas, and RBC Capital Markets acting as co-financial advisors and Fried, Frank, Harris, Shriver & Jacobson LLP serving as legal counsel.

Source: BlackRock