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Blackrock is clearly aggressively expanding into alternative assets if this closes, as this is right on the heels of GIP earlier this year. Blackrock bought Tennenbaum in 2018, and it looks like that caused a lot of turnover and was a harder part of the private credit market to scale. HPS/GIP are way bigger, so maybe they will operate more independently.
Anyone know who the advisors are?
Perella but I’m not sure if sell side or buy side
Would recommend exiting asap. Folks at GIP have noticed total collapse of work culture and toxicity post integration. Serious power struggles will be taking place…
like GIP's work culture was so great and devoid of toxicity pre-merger...
This is hilarious if true. Waaaahhhh, I can't abuse my employees the way I used to before I became a public company....
The horror...
I heard Blackrock infra folks are reporting into GIP folks (i.e. GIP folks are running the show in infra).
Yeah that’s 100% right - just imagine how that’s received and how disgruntled the Blackrock guys are. Completely poor integration that has led to some big big issues taking place at the firm.
I don't think anyone at GIP will leave given the retention bonuses they handed out like candy!
Any details on this?
[edited]
Any word on advisors?
PWP (lead) and MS to BlackRock. JPM (lead), GS, BofA, DB, BNP and RBC to HPS
It’s a human capital business. Regardless of how this is pitched, there’s zero chance that Blackrock doesn’t mess up the integration. The rumbles I’ve heard is that HPS’ culture has pretty much imploded as seniors have cashed out on backs of everyone else
Accurate
I think it will lead to accretion for Blackrock. But I do think when you take elite Cravath/DLJ style concepts and enmesh them into or grow them into concepts that are further along toward the “Walmart” end of the continuum, you are going to dilute that original entity’s culture and vibe and that comes with implications for that original entity, the TotalCo, and perhaps most importantly for the folks working at the original entity or who are thinking of joining. There are material though admittedly sometimes difficult to articulate differences between working at Leonard Green 10 years ago vs. Leonard Green now vs. Any public MF these days.
Can you please explain why you brought up LGP and further elaborate on your point?
I think I know where you're going with it though - LGP has been (and is) my dream shop for years, however, I think several years ago it was the best shop to join with material upside ahead and great culture. Now that they raised that behemoth $15 bn fund and have expanded significantly, I can't help but think they're priming for a sale to another party and the seniors will get a massive payout.
I also find it hard to believe the culture will still stay as good as it was given the tremendous increase in AUM.
They won’t sell.. at least I don’t think they will or that people will be interested in buying. Maybe though, like sell some of the fund to a fund investor, but not a sale to black rock type I don’t see that happening.
LGP now is still an amazing opportunity.
However — you essentially captured it. It was better when you had a chance to be a part of them going from a $4B fund to a $15B fund or whatever over the course of 2 funds / 10y.
Joining LGP I see as similar to like a Veritas — you have no path to partner, the fund will underwrite to a 14% IRR to harvest mgmt fees / have some upside winners. But you will be well taken care of until such a time if/when they decide to fire you.
I worked at BLK in private credit / capital and watched the TCP aftermath. In my view, the culture is shitty both in US/UK teams and it's why I moved on. Friends at HPS have told me the culture there is pretty good (albeit intense). Heard similar things about TCP before the acquisition so I would wager the turnover at HPS will be immense if the deal goes through - both at senior and junior levels.
Could someone please elaborate on the specific aspects that make BlackRock's culture bad? I understand that experiences may vary across different groups within the company. Is that correct?
Imagine working in an investing role and everything around you that you need to support your work as an investor moves at the pace of a bureaucratic corporate company. Bloated middle and back offices, poor integration of past acquisitions (TCP was bought in 2018 and is now being cast aside as a failed acquisition without understanding that Blackrock hampered their investing style) and a general lack of freedom to be creative without stepping on some other internal team's toes
Would be interesting to watch and we are all speculating here. But currently HPS culture is great and lean ie. little bureaucracy and easy access to key decision makers. Blackrock's staffing bench is so much more inflated from an AUM-to-headcount efficiency standpoint. The key is how they keep this part of the culture alive where you have fewer albeit much more motivated staffers.
The biggest douche in all of finance I've ever had the displeasure of working with was a senior guy who came from BlackRock, which is I know very anecdotal but I'm not surprised at all they have a shit culture.
As per bloom “The deal also includes a retention package of as much as $675 million for HPS employees.”
How many employees do these guys have?
Like 760
Website says 240 IPs so probably like 100 actual investment professionals they’ll divy this up over
Deal is all-stock though lol
Blackrock stock is good currency though, essentially a 60/40 index
BlackRock may have cash sitting around to fund this? Kapnick got a fucking bag is all I know, he owned a massive portion of the firm.
J.P. Morgan Securities LLC served as lead financial advisor to HPS, with Goldman Sachs & Co. LLC, BofA Securities, Inc., Deutsche Bank Securities Inc., BNP Paribas, and RBC Capital Markets acting as co-financial advisors
How does the fee structure work here?
That's quite the party - why so many advisors?
They were dual tracking IPO from what was in the news. Likely those were the book runners from the IPO process
Presume all those guys provide financing to HPS' vehicles and were active on the IPO timeline, so gotta give them a taste of the fees here
Delete
Bump numbers for retention came out, does anyone know what they gave generally? I have heard anecdotally was pretty small
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