BlackRock Pays $12 Billion to Catch Up in Private Credit
Boss Larry Fink is at it again, splashing out on an alternative asset manager. It’s risky, but he can afford it.
A big deal.
Source: Bloomberg
The trend is your friend. Or, in Larry Fink’s case, your primary acquisition tickbox. The chief executive officer of asset management giant BlackRock Inc. has pulled off another large and expensive leap into alternative investments. The $12 billion deal for private credit specialist HPS Investment Partners LLC has been pretty well received — but the risks of Fink’s latest swing-for-fences purchase can’t be ignored.
Private credit has boomed as financial regulation has made life harder for traditional bank lenders. BlackRock has been trying to build its own business in this area, but doing so takes time. HPS, co-founded and led by Goldman Sachs Group Inc. alumnus Scott Kapnick, is one of the few acquisition targets large enough to make a difference to a company of BlackRock’s size. Assets under management in private credit will grow from $89 billion to $220 billion after the buy. Even then, that’s puny compared with BlackRock’s $12 trillion in total managed assets at the end of the third quarter.