BlackRock To Buy HPS Investment Partners In About $12 Bln Equity Deal

(RTTNews) - Asset manager Blackrock Inc. (BLK) announced Tuesday its agreement to acquire privately held credit investment manager HPS Investment Partners LLC for approximately $12 billion in equity.

In the deal, the equity is issued by a BlackRock unit, for total consideration of 12.1 million SubCo Units, which are exchangeable on a one-for-one basis into BlackRock common stock.

A portion of the deal consideration will be paid at closing, and a portion will be deferred approximately five years. Around 9.2 million SubCo Units will be paid at closing.

Further, around 25% of the consideration, or 2.9 million SubCo Units, will be paid in approximately five years, subject to achievement of certain post-closing conditions.

The company added that there is also potential for additional consideration to be earned of up to 1.6 million SubCo Units, based on financial performance milestones measured and paid in approximately five years.

Of the total deal consideration, up to $675 million in value will be used to fund an equity retention pool for HPS employees.

In aggregate, inclusive of all SubCo Units, the maximum amount of BlackRock common stock issuable upon exchange for SubCo Units would be around 13.7 million shares.

As part of closing the acquisition, BlackRock expects to retire for cash, or refinance, around $400 million of existing HPS debt. The transaction is not expected to meaningfully change BlackRock's leverage profile.

The deal is expected to increase private markets fee-paying AUM and management fees by 40% and approximately 35%, respectively. It will be modestly accretive to BlackRock's as-adjusted earnings per share in the first full year post-close.

The transaction is expected to close in mid-2025 subject to regulatory approvals and customary closing conditions.

Following the deal, BlackRock and HPS plan to form a new, combined private financing solutions business unit, led by HPS executives.

The acquisition is expected to bring together BlackRock's strong corporate and asset owner relationships with HPS's diversified origination and capital flexibility.