BlackRock to Buy HPS Investments in $12B All-Stock Deal

BlackRock has agreed to acquire $148 billion global credit investment manager HPS Investment Partners for approximately $12 billion in an all-stock transaction with 100% of the consideration paid in BlackRock equity.

The equity is issued by a BlackRock unit, for total consideration of 12.1 million SubCo Units, which are exchangeable on a one-for-one basis into BlackRock common stock.

A portion of the transaction consideration will be paid at closing, and a portion will be deferred approximately five years. Approximately 9.2 million SubCo Units will be paid at closing. Approximately 25% of the consideration, or 2.9 million SubCo Units, will be paid in approximately five years, subject to achievement of certain post-closing conditions.

There is also potential for additional consideration to be earned of up to 1.6 million SubCo Units based on financial performance milestones measured and paid in approximately five years. Of the total deal consideration, up to $675 million in value will be used to fund an equity retention pool for HPS employees.

In aggregate, inclusive of all SubCo Units, the maximum amount of BlackRock common stock issuable upon exchange for SubCo Units would be around 13.7 million shares.

As part of closing the transaction, BlackRock expects to retire for cash, or refinance, approximately $400 million of existing HPS debt. The transaction is not expected to meaningfully change BlackRock’s leverage profile.

The deal is expected to increase private markets fee-paying AUM and management fees by 40% and approximately 35%, respectively, and be modestly accretive to BlackRock’s as-adjusted earnings per share in the first full year post-close.

Following the deal, BlackRock and HPS plan to form a new, combined private financing solutions business unit, led by HPS executives. The transaction is expected to close in mid-2025.

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.