Citigroup and HPS Investment Partners, the private credit arm of BlackRock, have launched a €15 billion private capital program targeting corporate borrowers across Europe, the Middle East, and Africa.
The structure is straightforward: Citi originates the deals, HPS puts up the majority of the capital, and the credit risk shifts off Citi’s balance sheet onto HPS. For HPS, which manages $381B in assets under management, it’s a pipeline of deal flow from one of the world’s largest banks.
How the partnership actually works
The program operates on an initial five-year term and focuses on sub-investment-grade debt. Target borrowers include corporate entities and sponsor-backed companies across Continental Europe and the UK. The program is also set to expand into the Middle East.
Citi’s role as the originator is critical here. The bank maintains its client relationships, keeps earning fees, and stays relevant in the lending market without loading up its own balance sheet with risk-weighted assets. HPS, meanwhile, gets access to Citi’s deal-sourcing infrastructure.
Why banks and private credit are converging
After the 2008 financial crisis, banks got hit with stricter capital requirements. Holding risky loans on their books became expensive. Private credit firms, unburdened by those same rules, stepped in to fill the gap.
BlackRock’s acquisition of HPS has only accelerated this trend. With $381B in AUM, HPS has the firepower to absorb enormous volumes of credit risk, exactly the kind of counterparty Citi needs to make a €15B program work.
What this means for investors and the broader market
For institutional investors allocating to private credit through managers like HPS, this kind of bank partnership provides a more diversified deal pipeline. Citi’s origination network spans dozens of countries and thousands of corporate relationships.
The deal also underscores how competitive the European private lending market has become. Sub-investment-grade corporate borrowers in the EMEA region now have yet another well-capitalized lending option. More competition among lenders generally means better terms for borrowers, which could compress yields over time.
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