BlackRock, Inc. ( BLK ) shares are trading higher today. The company disclosed a definitive agreement to acquire HPS Investment Partners for around $12 billion.

The acquisition will be fully paid in BlackRock ( BLK ) equity, issued as “SubCo Units” by a wholly-owned subsidiary of BlackRock ( BLK ), exchangeable one-for-one into BlackRock ( BLK ) common stock.

A portion of the consideration will be paid at closing, with approximately 9.2 million SubCo Units paid at the same time.

About 25% (2.9 million SubCo Units) will be deferred for five years, contingent on post-closing conditions. Additionally, up to 1.6 million SubCo Units may be earned based on financial performance milestones. The total deal could result in the issuance of approximately 13.7 million BlackRock ( BLK ) shares.

The acquisition will integrate BlackRock’s extensive corporate and asset owner relationships with HPS’s expertise in diversified origination and capital flexibility. This transaction strengthens BlackRock’s offerings for insurance clients.

Together, the combined private credit franchise with ~$220 billion in client assets and BlackRock’s $3 trillion public fixed-income business will offer clients comprehensive public and private income solutions across their entire portfolios.

The combined platform will offer end-to-end capabilities in credit solutions, asset-based finance, real estate, private placements, and CLOs.

The acquisition positions BlackRock ( BLK ) as a full-service, fiduciary provider of public and private asset management and technology solutions for the insurance sector.

As part of the transaction, BlackRock ( BLK ) plans to retire or refinance approximately $400 million of existing HPS debt. The deal is not expected to significantly impact BlackRock’s leverage profile.

The company expects to increase private markets fee-paying AUM and management fees by 40% and 35%, respectively, and 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. Notably, BlackRock ( BLK ) projects the private debt market to surpass $4.5 trillion by 2030.

Laurence D. Fink, BlackRock ( BLK ) Chairman and CEO, said, ”With GIP, and now HPS, we are expanding our private markets capabilities across our comprehensive global platform. Our Aladdin technology, including eFront, and soon Preqin, will make access to private markets simpler and more transparent. These capabilities, together with our global reach, deep relationships, and powerful technology, differentiate our ability to serve clients.”

As of the third-quarter end, BlackRock’s total AUM stood at $11.5 trillion.

Investors can gain exposure to the stock via Fidelity Disruptive Finance ETF ( FDFF ) and Capitol Series Trust The Nightview Fund NITE .

Price Action: BLK shares are up 1.04% at $1,030.72 at the last check Tuesday.

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