→ Expanding Aggressively into Private Markets. Hey, all. Welcome back from the Thanksgiving break. Hope everyone who celebrated had a lovely time off.

As everyone knows, investor demand for private credit is growing rapidly. So, managers are either launching products to reach new markets such as individuals (or to make it easier for institutions to invest) — like BondBloxx, Virtus, State Street Global Advisors, and Apollo — or making large acquisitions to expand their offerings — like PGIM, and now, BlackRock.
 

By now you’ve seen that BlackRock plans to buy private credit manager HPS for $12 billion as part of a move to expand its alternatives capabilities. Like many investment firms, BlackRock is betting big that the private debt market will continue to skyrocket. In fact, the firm projects private debt markets will double to $4.5 trillion by 2030. This is why the investment juggernaut has been on a buying spree this year, having previously snapped up Global Infrastructure Partners for $12.5bn and Preqin for $3.2bn.
 

The plan is to combine HPS’ $148bn business with BlackRock’s $89bn private debt platform, making it one of the largest private credit managers in the world. Post-merger, the goal is to have this combined entity work alongside BlackRock’s $3 trillion public fixed income business to seamlessly offer both public and private income products. BlackRock’s Larry Fink said that buying HPS is part of the firm’s plan to “make access to private markets simpler and more transparent.”
 

Not surprisingly, industry observers are bullish on BlackRock’s strategy. Moody’s Ana Arsov said recent acquisitions have catapulted the firm “into the ranks of the top 5 private credit managers… significantly advancing its private-market growth goals.” Fitch Ratings’ Meghan Neenan called the deal a sign that private credit M&A activity is “likely to continue” into 2025.
 

This ambitious expansion into private credit doesn’t just strengthen BlackRock’s market position: it may also lead to broader strategic opportunities. Brennan Hawken of UBS suggested that the acquisition could eventually open the door for BlackRock to enter the defined contribution market.
 

But while some folks are describing this sizable deal on LinkedIn as a safe bet, others remain cautious. One financial planner speculated whether "expanding aggressively into private markets" is prudent “amid rising interest rates and geopolitical uncertainty,” especially if the incoming administration makes policy changes that alter the attractiveness of the asset class.
 

Others also noted that the private credit market's rapid rise might be accompanied by increasing competitive pressures and potential risk of oversaturation, which could eventually compress returns and make differentiation more challenging. While KBW’s Aidan Hall and Kyle Voigt expect this deal to benefit both BlackRock and HPS, they believe this deal signals continued consolidation and scaling within the credit space. Goldman’s Alexander Blostein expressed enthusiasm for the deal but added it could put pressure on smaller private debt managers.
 

Anyway, heck if I can find a more telling sign that private credit has gone mainstream than the world’s largest asset manager spending billions on the asset class. So, what do you think? Drop me a line at james.comtois@institutionalinvestor.com and let me know your take — just keep it classy!