BlackRock, the world’s largest asset management firm, announced that it will purchase private credit provider HPS Investment Partners in a deal valued at approximately $12 billion. The acquisition will be an all-stock transaction, marking a significant move as BlackRock seeks to capitalise on the booming private credit market.

Private credit, which involves non-bank institutions lending directly to businesses, has surged in popularity in recent years. Stricter banking regulations have made it more expensive for traditional lenders to offer loans to riskier borrowers, providing an opportunity for firms like HPS to thrive. According to data from Preqin, the private credit market is expected to grow from $1.5 trillion at the end of 2023 to $2.6 trillion by 2029.

Larry Fink, BlackRock’s CEO, has previously stated that private credit will be a key driver of the company’s growth within the alternatives space. “Private credit will be a primary growth driver within alternatives for BlackRock in the coming years,” Fink noted in earlier statements.

HPS Investment Partners was originally founded in 2007 as part of Highbridge Capital Management, a hedge fund unit within JPMorgan’s asset management division. In 2016, the senior executives of HPS bought out the firm from JPMorgan.

Cathy Seifert, an analyst at CFRA Research, explained that the acquisition aligns with BlackRock’s strategy to expand its presence in the rapidly growing private credit market. “It’s important to grow alternatives to gain a presence in the rapidly growing space,” she remarked ahead of the deal’s announcement. The transaction is expected to close by mid-2025.