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BlackRock has a tentative agreement to buy private equity group HPS Investment Partners, as the world’s largest asset manager looks to bolster its private equity business and add to one of Wall Street’s biggest lenders.
The two sides have agreed on a major issue contract summary and an eye to announce a common word after the Thanksgiving holiday, according to four people familiar with the matter.
HPSfounded less than two decades ago by Goldman Sachs’ former head of investment banking Scott Kapnick, earlier this year they were working to make an initial public offering that would have valued the company at around $10bn. A sale may yield more than the price. Two sources said the final price would be closer to $12bn than $10bn.
Although it is possible that the contract may end, BlackRock prides itself on being able to provide immediate assurance to its partners.
The deal could mark the latest move for BlackRock, which has $11.5tn in assets under management and has been doing well. Founder Larry Fink is interested in promoting the fast-growing business, which has higher fees than the sales revenue that fueled its growth.
Last month BlackRock completed the $12.5bn acquisition of infrastructure firm Global Infrastructure Partners. They also agreed in July to buy Preqin, a UK-based retail investment group, for £2.55bn.
BlackRock is also in talks with Millennium Management about a deal that would see the wealth manager buy a minority stake in Izzy Englander’s $69.5bn multi-strategy hedge fund manager.
HPS has become a behemoth in the private loan companies since it was founded as part of JPMorgan Chase in 2007, managing about $150bn at the end of September. They were early and prolific entrepreneurs in the region, and they have benefited as traditional banks have been forced out of their lending businesses as post-crisis regulations have reduced their returns or forced them out of business altogether.
A mortgage loan company is one of the most sought-after investment managers in the financial industry. It’s one of the few private equity lenders of its size that could move the needle for a buyer like BlackRock, which is eager to take the lead in a booming asset class as rivals like Ares, Apollo and Blackstone grab market share.
HPS did not respond to a request for comment. BlackRock declined to comment. It has $450bn in other assets under management, since the GIP deal is closed.
Additional reporting by James Fontanella-Khan and Antoine Gara
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