Inside the €15 Billion Citi–BlackRock HPS Private Credit Partnership in Europe

The program has several defining features:

• Scale and timeline: The platform is designed to finance up to €15 billion in debt opportunities over an initial five‑year term.
• Geographic focus: Lending will start in Continental Europe and the UK, with plans to expand into the Middle East as the program grows.
• Client base: Target borrowers include corporate companies and sponsor‑owned firms, particularly those backed by private‑equity investors.
• Deal sourcing: Citi will leverage its investment banking, corporate banking, and commercial banking origination capabilities to identify lending opportunities for the program.

The collaboration effectively combines Citi’s global client network with HPS’s private credit investment platform, allowing loans to be structured outside traditional bank balance sheets while still benefiting from bank‑level deal flow and underwriting expertise.

Focus on Sub‑Investment‑Grade Direct Lending

The program will primarily pursue sub‑investment‑grade debt opportunities, a common target segment in the direct‑lending market where private credit funds often provide financing to mid‑market companies and sponsor‑backed acquisitions.

These borrowers typically seek alternatives to public bond markets or syndicated bank loans. Private credit funds can offer:

• flexible deal structures
• faster execution
• larger single‑lender commitments

For borrowers and private‑equity sponsors, that flexibility has made direct lending one of the fastest‑growing segments of global finance.

How It Compares With Citi’s Apollo Private Credit Deal

The HPS partnership is not Citi’s first major move into private credit. In 2024, the bank announced a $25 billion private credit and direct‑lending program with Apollo Global Management, initially focused on North America with potential expansion to other regions.

The two partnerships illustrate a broader strategy:

• Apollo partnership: Large-scale private credit program centered on North American lending markets.
• HPS/BlackRock partnership: A regional push into Europe, the UK, and eventually the Middle East.

Both deals follow a similar model in which a major bank sources borrowers and transactions while a large alternative asset manager provides the capital base.

Why Europe Is Becoming a Private Credit Growth Market

One reason these partnerships are expanding into Europe is structural. Compared with the United States, European companies still rely far more heavily on traditional bank financing.

Research from Apollo estimates that non‑bank lenders represent only about 12% of corporate lending in Europe and the UK, versus roughly 75% in the United States.

That gap suggests a large potential market for private credit managers and institutional investors seeking higher‑yielding debt opportunities.

Regulatory pressures on banks—such as tighter capital requirements—also encourage the growth of private credit funds that can step in to finance companies directly.

The Liquidity and Default Risks in Private Credit

Despite rapid growth, the private credit market faces increasing scrutiny.

Citi research notes that the sector is navigating rising default risks and liquidity pressures, especially as economic conditions change and leverage increases among borrowers.

Another concern is liquidity mismatch. Private credit funds typically invest in long‑term, illiquid loans while offering investors periodic redemption options. Recent events illustrate this tension: BlackRock limited withdrawals from a flagship HPS private credit fund after a surge in investor redemption requests.

These episodes highlight a key challenge for the industry: even when underlying loans remain sound, funds must carefully manage investor liquidity expectations.

What the Partnership Signals for the Market

The Citi–HPS collaboration underscores several major shifts in global finance:

• Banks and asset managers are increasingly partnering rather than competing in credit markets.
• Europe is emerging as a major growth frontier for private credit lending.
• Institutional capital is scaling direct lending platforms that rival traditional bank loan markets.

At the same time, the sector’s expansion is occurring alongside rising concerns about defaults, transparency, and liquidity management. How effectively large platforms handle those risks may determine whether private credit’s rapid growth in Europe continues at the current pace.

For now, the €15 billion Citi–BlackRock HPS initiative represents one of the clearest signals yet that global financial institutions see Europe’s private credit market entering a new expansion phase.