NEW YORK (Reuters) - A dealmaking splurge by BlackRock in 2024 may continue as the world's largest asset manager is expected to opportunistically look to further expand in private credit, real estate, infrastructure or possibly private equity.

New York-based BlackRock announced last week plans to buy private credit firm HPS Investment Partners for about $12 billion in a deal that BlackRock CEO Larry Fink said will allow the companies to offer an integration of private and public market investment products. It was BlackRock's third major acquisition this year.

Looking ahead, BlackRock could bolster its presence in private markets through further acquisitions, financial sources and analysts said. Targets could include an expansion in private credit or bulking up in private equity, positioning BlackRock to better compete with larger players in alternative investments.

"They look at everything," said Daniel Fannon, an analyst at Jefferies who covers BlackRock. "They are canvassing the market for appropriate partners and asset classes that they are relevant in."

BlackRock spent roughly $28 billion in 2024 to strengthen its private market offerings, a strategic move that Fink views as key to positioning the firm as a conduit for private capital into global infrastructure projects at a time of tightening government budgets and rising public debt.

Private credit, which involves non-bank institutions providing loans to companies, has experienced significant growth in recent years due to stricter regulations that have increased the cost for traditional banks to fund higher-risk loans.

In October, BlackRock finalized its $12.5 billion acquisition of investment firm Global Infrastructure Partners and anticipates completing a $3.2 billion purchase of private markets data provider Preqin by year-end.

The HPS deal will create a private credit franchise with about $220 billion in client assets. Rival alternative asset manager Ares Management had approximately $313.6 billion in private credit assets under management as of Sept. 30. Blackstone's overall credit business is about $432 billion, the bulk of it in private credit, the firm says.

BlackRock may continue expanding in infrastructure and private credit, said a source involved in the HPS deal, potentially targeting smaller, complementary acquisitions to enhance its offerings.

"BlackRock has made a very loud statement that they want to be much bigger in private credit and in infrastructure within private markets," said Alexander Blostein, a senior analyst at Goldman Sachs who covers BlackRock.

A further push into private assets could also include buying an asset to give BlackRock exposure to real estate - albeit once the commercial market has stabilized, said one senior investment banker.

BlackRock's alternative assets under management - including private debt and equity - totaled approximately $320 billion as of the end of September, less than 3% of its $11.5 trillion in assets. BlackRock's alternative assets are dwarfed by its holdings in low-fee products like index funds and ETFs.

Considering BlackRock's size, recent acquisitions seem to hold greater strategic importance than asset management, suggesting additional ventures into private markets are possible, said Cathy Seifert, an analyst at CFRA Research.

"We've always thought of making organic and inorganic investments in our business," BlackRock's chief financial officer, Martin Small, said during the company's third-quarter earnings call in October. "Inorganic is a tool that we have in order to optimize organic growth, but we don't need M&A to meet our organic growth targets," he said then.

BlackRock declined to comment for this story.

PRIVATE EQUITY

Private equity could be another avenue for expansion, said a source familiar with the matter and the senior investment banker. BlackRock has had informal conversations with private equity firms in the past, but none have progressed beyond preliminary stages, the banker said.

BlackRock's acquisitions have been relatively "opportunistic" this year, said the same banker, suggesting BlackRock could soon be chasing new targets if the circumstances are advantageous.

Private equity, however, may be less of an immediate focus given that the industry has struggled in recent years.

"It's just a much tougher part of the business," said Greggory Warren, a strategist at Morningstar.

Asked about a potential expansion in private equity, BlackRock's chief operating officer, Rob Goldstein, said on Tuesday that the firm already has private equity capabilities.

"For the time being, when we look at where the puck is going and we look at where clients are increasingly focused and find allocations, we prioritize both infrastructure, that's debt and equity, as well as private credit," he said on a panel at the Reuters NEXT conference in New York.

BlackRock's private equity teams manage $42 billion in capital commitments, trailing industry heavyweights such as Blackstone, which oversees $345 billion in private equity assets, and KKR, with $190 billion as of the end of September.

"BlackRock doesn't have quite as much (private equity) as Blackstone and KKR, but I think they're more interested in backfilling other parts of the business," said Warren.

Growing its secondaries business through an acquisition would be one way to advance its private equity exposure, with focus on one of its hottest sectors, said the senior investment banker.

Total transaction volume in the market, where owners of stakes in private equity funds can sell them to other investors before the fund matures, is expected to hit a record-breaking $140 billion this year, according to BlackRock's own website.

To be sure, the company may need to take a breather after this year's acquisition surge.

"I imagine they'll digest some of the recent acquisitions, then the focus turns to upcoming fundraising, product creation, sales and distribution," said Benjamin Budish, an analyst at Barclays.

For Mac Sykes, portfolio manager for BlackRock investor Gabelli Funds, HPS was not BlackRock's last foray into acquisitions but the company is under no pressure to do more deals.

"I see them as being opportunistic with a high bar. They are smart capital allocators," Sykes said.