BlackRock has struck a deal to acquire full control of growth-focused credit firm Kreos Capital.
The acquisition complements BlackRock’s Global Credit business with the addition of a seasoned investment team and successful long-term track record. Kreos is known as a provider of growth and venture debt financing to companies in the technology and healthcare industries.
“Over the past 20 years, BlackRock has built leading private debt capabilities to help clients achieve a variety of investment goals by aligning proven investment excellence with long term market opportunities,” said James Keenan, CIO and global head of BlackRock Private Credit, which has $148 billion in assets under management. “The Kreos team has built a world class investment process and delivered for clients through multiple cycles. Coupled with our expectation that growth and venture lending will figure prominently in the expansion of the global direct lending opportunity set going forward, we believe this is an opportune time to welcome the Kreos team to BlackRock.”
BlackRock found in its inaugural Global Private Markets Survey that income generation stands front and center as allocators are sourcing private markets managers at a fast pace. More than half of investors said they would invest in private credit in 2023, the survey released in April showed.
Kreos and its 45-person team, which will join BlackRock as part of the transaction, has demonstrated strong performance over a 24-year track record. Kreos’ investment team will integrate into BlackRock’s European Private Debt platform and current Kreos leadership will continue to be responsible for executing on the firm’s proven investment strategies.
“Current market dynamics have made private credit an attractive asset class as investors focus on its income generation, low volatility, portfolio diversification and its low defaults versus public markets,” said Stephan Caron, head of EMEA Private Debt at BlackRock. “The addition of this high-quality team, with an excellent track record across multiple market cycles, creates an opportunity for BlackRock to offer a larger proportion of the risk/return spectrum to investors globally.”
The transaction, which is expected to close in Q3 2023, is subject to customary regulatory and closing conditions. The financial impact of the transaction is not material to BlackRock earnings, officials added.
“As a pioneer of private debt solutions for high growth technology and healthcare companies in Europe and Israel, Kreos is now taking the next step by accelerating the business and partnering with BlackRock,” Mårten Vading, co-founder and General Partner at Kreos Capital. “The transaction enables us to leverage BlackRock’s scale, resources, and technology to create a holistic product offering that serves innovative companies globally.”
Since its inception in 1998, Kreos Capital has committed more than €5.2 billion ($5.6 billion) across more than 750 transactions in 19 countries, to more than 550 pan-European and Israeli high-growth companies in the technology and healthcare sectors. In technology, the firm has invested across fintech, enterprise software, cybersecurity, semiconductors, digital marketing, AI and other sub-sectors. In the life sciences field, it has backed companies in areas such as drug development, medical products and devices, and medtech.