BlackRock, the world’s leading asset manager, has announced its plans to acquire HPS Investment Partners in a stock deal worth $12 billion. This strategic move is designed to strengthen BlackRock’s foothold in the increasingly popular private credit sector.

Larry Fink, CEO of BlackRock, said in a statement, “Our goal has always been to stay ahead of our clients’ needs. With the scale, capabilities, and expertise of the HPS team, we will provide our clients with solutions that perfectly blend public and private.”

The acquisition is expected to finalize in mid-2025, at a time when the private credit sector is experiencing a surge. HPS’ publicly traded counterparts, such as Blue Owl Capital and Ares, have seen impressive gains of 54.6% and 46% respectively in 2024, far outpacing BlackRock’s 25.7% year-to-date gain.

This acquisition will result in an integrated private credit enterprise with around $220 billion in assets. Currently, HPS manages approximately $148 billion in assets, while BlackRock has oversight of $11.5 trillion as of the third quarter.

Industry insiders revealed to CNBC that HPS initially explored going public, a move that piqued BlackRock’s interest as it seeks to expand its alternative assets operation. Earlier this year, BlackRock announced it would acquire Global Infrastructure Partners and private market data provider Preqin for $12.5 billion and $3.2 billion, respectively.

The deal is also expected to increase BlackRock’s private market assets under management (AUM) and management fees by approximately 40% and roughly 35% respectively.

For those interested in investing or simply curious about the world of finance, this move signifies BlackRock’s strategic efforts to solidify its position within the private credit market, and the significant potential this sector holds.