BlackRock Inc. is reportedly in advanced talks to buy HPS Investment Partners, a global private credit manager with $65 billion in assets under management, according to the Financial Times. The deal, if completed, would bolster BlackRock’s presence in the rapidly growing private credit market and give it access to HPS’s expertise in leveraged loans and other alternative lending strategies.

Founded in 2007, HPS is known for its expertise in distressed credit, leveraged loans, and other private credit investments. The firm has offices in New York, London, Amsterdam, Tokyo, and Singapore and has a team of over 300 professionals. According to the FT, HPS generated $700 million in revenue and $390 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2022.

For BlackRock, the acquisition of HPS would be a strategic fit with its existing private credit business. BlackRock’s private credit group has over $90 billion in assets under management and has been growing rapidly in recent years. The addition of HPS’s expertise and global reach would allow BlackRock to offer a broader range of private credit solutions to its clients.

The private credit market has grown rapidly in recent years as investors seek higher returns and diversification in a low-interest-rate environment. Private credit investments include loans to businesses that are not publicly traded and are often considered to be less risky than traditional bank loans. As a result, private credit has become increasingly attractive to institutional investors, including pension funds, insurance companies, and sovereign wealth funds.

According to the FT, the deal to acquire HPS could be valued at over $1 billion. The transaction is expected to close in the first half of 2023, subject to regulatory approval.

The acquisition of HPS by BlackRock would be a significant move in the private credit market. It would combine two leading players in the industry and create a formidable competitor with a broad range of offerings. The deal is expected to close in the first half of 2023 and would be a positive development for BlackRock’s investors and the private credit market as a whole.