BlackRock has agreed to acquire HPS Investment Partners for nearly $12 billion but the deal has to be approved by government agencies.
The acquisition, which BlackRock says will give it more financing solutions and a broader range of clients, comes after a verbal agreement that was established on November 28.
According to an BlackRock, the deal will be paid out entirely in BlackRock equity.
HPS, a leading global credit investment manager with $148 billion in assets, will merge with BlackRock's private credit business, creating a combined platform with $220 billion in client assets.
"I am excited by what HPS and BlackRock can do together for our clients and look forward to welcoming Scott Kapnick, Scot French, and Michael Patterson, along with the entire HPS team, to BlackRock," said Laurence "Larry" D. Fink, BlackRock's chief executive officer and chairman.
"Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private."
BlackRock's global reach and HPS's capital is expected to boost its ability to offer investment options in both public and private markets.
This move is expected to benefit investors by increasing the company's earnings from private market investments by 40% and its management fees by 35%.
The deal also includes deferred payments, performance milestones, and an equity retention pool for HPS employees.
The acquisition process is set to close in 2025, however it must be approved by the Department of Justice and the Federal Trade Commission.
Earlier this year, BlackRock acquired Preqin, a U.K.-based data group for roughly $3.24 billion (£2.55 billion).
The move is part of BlackRock's strategy to strengthen its role in private markets, anticipating that the private debt market will reach $4.5 trillion by 2030.
