BlackRock to Acquire London-based Private Debt Manager Kreos Capital

BlackRock Inc. (NYSE: BLK) and Kreos Capital announced a definitive agreement under which BlackRock will acquire full control of Kreos, a provider of growth and venture debt financing to companies in the technology and healthcare industries.

The acquisition of Kreos adds to BlackRock’s position as a global credit asset manager and advances its goal “to provide clients with a diverse range of private market investment products and solutions.”

Kreos complements BlackRock’s Global Credit business “with a seasoned investment team and successful long-term track record, while the adjacent asset class unlocks additional private debt capabilities for BlackRock’s clients to access a larger proportion of the risk/return spectrum.”

James Keenan, CIO and Global Head of BlackRock Private Credit, commented:

“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. 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.”

Stephan Caron, Head of EMEA Private Debt at BlackRock, commented:

“Private debt investing has become an increasingly important component of investors’ portfolios. BlackRock’s recent Global Private Market Survey found that more than half of respondents plan to increase their private credit holdings in 2023. 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. 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.”

Mårten Vading, Co-founder and General Partner at Kreos Capital, commented:

“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. The transaction enables us to leverage BlackRock’s scale, resources, and technology to create a holistic product offering that serves innovative companies globally.”

Raoul Stein and Ross Ahlgren, Co-founders, and General Partners at Kreos Capital, commented:

“We are excited to see BlackRock’s continued commitment to private debt in general, and growth lending specifically. The combination of BlackRock and Kreos will provide a wide range of credit solutions to the growth ecosystem. The acquisition of Kreos by BlackRock is a testimony to the strength and importance of the innovation and technology sectors to the world’s leading asset manager.”

Since its inception in 1998, Kreos Capital has “committed more than €5.2 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 healthcare, it has backed companies in areas such as drug and treatment development, medical products and devices, and healthcare tech.”

Kreos is headquartered in London 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.”

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.”

Moelis & Company acted “as exclusive financial adviser” and Goodwin Procter London have “provided legal advice” to Kreos Capital.

Skadden, Arps, Slate, Meagher & Flom “provided legal advice” to BlackRock.

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