HPS Investment Partners, LLC

Background

Founded in 2007, HPS Investment Partners, LLC (HPS) is a leading global investment firm specializing in private credit, public credit, private equity, and real assets. With approximately $148 billion in assets under management as of December 2024, HPS has established itself as a significant player in the alternative investment landscape.

Key Strategic Focus

HPS's strategic focus encompasses:

Private Credit: Offering bespoke financing solutions across the capital structure, including senior secured debt, mezzanine investments, and asset-based finance.

Public Credit: Managing investments in syndicated leveraged loans, high-yield bonds, and collateralized loan obligations.

Private Equity and Real Assets: Engaging in equity investments and managing real asset portfolios.

The firm's diversified origination platform spans both sponsor and non-sponsor channels, enabling it to provide tailored capital solutions to a wide range of borrowers.

Financials and Funding

In June 2024, HPS closed its Specialty Loan Fund VI with $21.1 billion in investable capital, including $14.3 billion in equity commitments from a diverse group of global institutional investors. This fund focuses on providing capital solutions across various sectors and geographies.

In December 2024, BlackRock announced its acquisition of HPS for approximately $12 billion in an all-stock transaction. This strategic move aims to integrate HPS's private credit expertise with BlackRock's extensive public fixed income platform, creating a comprehensive private financing solutions business unit.

Leadership Team

Scott Kapnick, Chief Executive Officer: A former head of investment banking at Goldman Sachs, Kapnick co-founded HPS and has been instrumental in its growth and strategic direction.

Michael Patterson, Governing Partner: Patterson oversees HPS's direct lending funds and has played a key role in expanding the firm's lending platform.

Scot French, Governing Partner: French contributes to the firm's strategic initiatives and investment activities.

Following the acquisition by BlackRock, Kapnick, Patterson, and French are set to lead the newly formed private financing solutions business unit within BlackRock.

Competitor Profile

Market Insights and Dynamics:

The private credit market has experienced significant growth, with assets under management reaching approximately $1.7 trillion as of 2023. This expansion is driven by increased demand for alternative financing solutions and the retreat of traditional banks from certain lending activities.

Competitor Analysis:

HPS operates in a competitive landscape alongside firms such as Blackstone, Apollo Global Management, and Ares Management. These competitors offer a range of private credit solutions and have been expanding their presence in the market through strategic acquisitions and partnerships.

Strategic Collaborations and Partnerships

Guardian Life Insurance Company: In February 2022, Guardian acquired a minority equity stake in HPS, enhancing Guardian's investment capabilities and providing HPS with additional capital to invest across private credit strategies.

Enhanced Capital: In October 2024, HPS partnered with Enhanced Capital to invest in renewable energy and battery storage projects across the United States, leveraging the Inflation Reduction Act's provisions for tax credit monetization.

Operational Insights

HPS's ability to provide customized financing solutions across the capital structure has positioned it as a preferred partner for companies seeking non-traditional funding sources. The firm's extensive origination platform and flexible capital base enable it to navigate complex transactions and offer competitive terms to borrowers.

Strategic Opportunities and Future Directions

The acquisition by BlackRock presents significant opportunities for HPS to expand its reach and capabilities. By integrating with BlackRock's global platform, HPS can leverage enhanced resources and distribution channels to offer comprehensive financing solutions to a broader client base. The combined entity is well-positioned to capitalize on the growing demand for private credit and alternative investment strategies.