BlackRock considers USD 12 bln acquisition in private credit expansion

HPS specialises in lending to higher-risk companies and was founded by former executives from Goldman Sachs and JPMorgan Chase. The transaction, which could be announced this week according to reports by Financial Times and Bloomberg, is not yet finalised and could still fall through.

Private credit, which encompasses all debt not issued or traded publicly, has grown significantly over the past decade according to Yahoo Finance. Factors driving this expansion include higher interest rates and banking regulations that have limited traditional lenders' ability to provide leveraged loans. The market has ballooned from USD 41 billion in 2000 to an estimated USD 1.6 trillion today, though it remains small compared to the USD 12.5 trillion in total loans held by US banks.

Growing interest in private credit markets

BlackRock has been increasingly targeting alternative markets such as private credit. This push mirrors similar moves by other financial institutions, including a recent USD 25 billion private credit partnership between Citigroup and Apollo Global Management focused on direct lending.

Despite its growth, private credit has drawn scrutiny. For instance, JPMorgan officials expressed concerns earlier this year, suggesting that the sector's expansion outside the traditional banking system might allow risks to go unchecked.

If finalised, the HPS acquisition would be BlackRock’s third major alternative asset purchase in 2024. Earlier this year, the firm acquired London-based data provider Preqin for USD 3.2 billion and private equity firm Global Infrastructure Partners for USD 12.5 billion.

HPS was originally founded in 2007 as part of JPMorgan Chase's asset management unit but became independent through a buyout in 2016 after the bank scaled back its exposure to riskier loans due to post-2008 financial crisis regulations. As of September, HPS managed USD 148 billion in assets, and its acquisition would strengthen BlackRock’s private credit capabilities as the firm continues to diversify beyond traditional asset management.