AS LARRY Fink drives BlackRock deeper into private markets, he keeps adding new billionaires to the asset-management giant’s roster – and making them all richer than he is in the process.
The latest trio: Scott Kapnick, Scot French and Mike Patterson, the founders of HPS Investment Partners. BlackRock’s US$12 billion acquisition of the private credit specialist, announced on Tuesday (Dec 3), will give the three Goldman Sachs alumni a combined net worth of US$8.6 billion, according to the Bloomberg Billionaires Index.
It’s the third private-markets acquisition this year for Fink, who the wealth index estimates is worth US$1.8 billion. BlackRock announced it was buying investment firm Global Infrastructure Partners in January for about US$12.5 billion – cementing a US$2.3 billion fortune for founder Bayo Ogunlesi – and around midyear agreed to buy private-markets data firm Preqin in a £2.6 billion (S$4.4 billion) all-cash acquisition, netting founder Mark O’Hare about US$2 billion.
BlackRock, the world’s largest asset manager with US$11.5 trillion, is looking to expand from public stocks and bonds into private markets as demand for the asset class surges. Kapnick, French and Patterson will lead a new private financing solutions business inside the company, according to a statement announcing the deal.
“I am excited by what HPS and BlackRock can do together for our clients,” Fink said.
Validated bet
For the founders of HPS, the deal is validation of the private markets bet they made more than a decade ago.
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Kapnick joined JPMorgan’s Highbridge Capital Management from Goldman Sachs to help it build its own mezzanine finance business. That involved investing in a type of loan between equity and debt using money from outside investors, similar to today’s private credit model. French and Patterson joined him.
By 2013, Kapnick was running Highbridge, but the financial crisis and increased scrutiny of banks was making growth difficult. In 2016, HPS bought itself out of JPMorgan in a deal that valued it at almost US$1 billion.
Assets at the firm have since grown more than four-fold to US$148 billion.
A US$12 billion HPS valuation would give Kapnick a US$4.2 billion fortune, while French and Patterson would each be worth nearly US$2.2 billion, according to the index. About a quarter of the equity due in the all-share deal will vest in five years, meaning their wealth will initially be lower.
A representative for HPS did not reply to a request for comment on the founders’ net worth.
The new private financing solutions business at BlackRock will offer credit solutions, asset-based finance, real estate, private placement and collateralised loan obligations. It will include direct lending, fund finance and GP and LP solutions. BLOOMBERG
