In a significant move that underscores the growing importance of private debt in the global investment landscape, BlackRock Inc., a leading global credit asset manager, has announced its acquisition of Kreos Capital. The deal, announced on 8 June 2023, will see BlackRock taking full control of Kreos Capital, a top-tier provider of growth and venture debt financing to technology and healthcare companies.
The acquisition enhances BlackRock's role as a premier global credit asset manager and propels its ambition to offer clients a more extensive variety of private market investment solutions. Kreos Capital, with its seasoned investment team and successful long-term track record, complements BlackRock's Global Credit business. It also introduces an adjacent asset class, thereby broadening the range of private debt capabilities that BlackRock’s clients can tap into and access a more extensive proportion of the risk-return spectrum.
James Keenan, CIO and Global Head of BlackRock Private Credit, expressed his optimism about the acquisition, stating that the Kreos team's world-class investment process and consistent delivery for clients through multiple cycles make this an opportune time for their incorporation into BlackRock. He also emphasised the prominence of growth and venture lending in the expansion of the global direct lending opportunity set.
Stephan Caron, Head of EMEA Private Debt at BlackRock, highlighted the increasing importance of private debt investing in portfolios. He cited BlackRock's recent Global Private Market Survey, which found that more than half of respondents plan to increase their private credit holdings in 2023. According to him, the current market dynamics have made private credit an attractive asset class, with investors focusing on its income generation, low volatility, portfolio diversification, and low defaults compared to public markets.
Mårten Vading, Co-founder and General Partner at Kreos Capital, stated that as a trailblazer in private debt solutions for high-growth tech and healthcare companies in Europe and Israel, Kreos is eager to propel its business by joining forces with BlackRock, leveraging their scale, resources, and technology to offer comprehensive product solutions to innovative companies worldwide.
Similarly, Raoul Stein and Ross Ahlgren, Co-founders and General Partners at Kreos Capital, expressed their enthusiasm over BlackRock's sustained dedication to private debt and growth lending, noting that the union of the two companies would broaden credit solution offerings to the growth ecosystem.
Since 1998, Kreos Capital has committed over €5.2 billion across more than 750 transactions in 19 countries, to over 550 pan-European and Israeli high-growth companies in the technology and healthcare sectors. The company has made significant investments across various sub-sectors in technology, including fintech, enterprise software, cybersecurity, semiconductors, digital marketing, artificial intelligence, and in healthcare, backing companies in drug and treatment development, medical products and devices, and healthcare tech. Kreos Capital is also a member of the Tech Tour Investors Club.
The 45-person team of Kreos Capital will join BlackRock, and the leadership will continue to be responsible for executing the company’s proven investment strategies. The investment team will integrate into BlackRock's European Private Debt platform.
The transaction is expected to close in third quarter of 2023 and is subject to customary regulatory and closing conditions.
This acquisition is a testament to BlackRock's continued commitment to private debt and growth lending. It also highlights the strength and importance of the innovation and technology sectors to the world's leading asset manager. The combination of BlackRock and Kreos will provide a wide range of credit solutions to the growth ecosystem, serving innovative companies globally.
