| HPS Investment Partners, LLC | |
| Type: | Private |
| Industry: | Investment management |
| Former Name: | Highbridge Principal Strategies |
| Location: | New York City, U.S. |
| Key People: | Scott Kapnick (CEO) |
| Aum: | US$106 billion (October 2023) |
| Num Employees: | 630 (2023) |
| Products: | Private credit Private equity Mezzanine capital Real assets Public credit |
| Footnotes: | [1] |
HPS Investment Partners (HPS) is an American investment firm headquartered in New York City. The firm focuses on investments in private credit and public credit as well as private equity and real assets. Outside the United States, the firm also has offices in Europe, the Middle East and Asia-Pacific.
In 2022, the firm was ranked by Private Debt Investor (under Private Equity International) as the third largest private debt investment firm based on total fundraising over the most recent five-year period.[2]
In 2007 Scott Kapnick, Scot French and Michael Patterson founded Highbridge Principal Strategies after leaving Goldman Sachs. It was formed as the private equity and credit investment division of Highbridge Capital Management (Highbridge) within J.P. Morgan Asset Management. Its strategies included mezzanine capital, bonds, direct lending and growth capital.[3] [4] [5] [6] [7] [8] [9]
In 2009, as a result of 2007–2008 financial crisis, many hedge funds suffered from redemption. However Highbridge Principal Strategies grew significantly during this period.[10]
In February 2011, Highbridge Principal Strategies was expanded after Highbridge acquired Gávea Investimentos and had let go of its event-driven trading team.
In December 2014, Institutional Investor reported that Kapnick and the management team of Highbridge were in discussions with JPMorgan Chase to lead a management buyout of the firm. The talks were focused mostly on Highbridge Principal Strategies. One of the main reasons for the buyout was the Volcker Rule which put strict limits on how much banks can invest in alternative investments which would be detrimental to Highbridge. Another reason was how Highbridge staff were compensated with bank stock which put the firm at a disadvantage when hiring and retaining staff compared to privately held hedge funds since the bank was a highly regulated entity. Finally, Jes Staley who headed J.P. Morgan Asset Management and was instrumental in Highbridge's acquisition back in 2004 had left the firm in 2013 and was replaced by Mary Callahan Erdoes. In fact by this period, Highbridge co-founders Glenn Dubin and Henry Swieca and former Highbridge President Todd Builione had all left Highbridge.
By 2015, Highbridge Principal Strategies became the larger more dominant part of Highbridge due to its performance and popularity among investors. It managed $22 billion in assets under management while the hedge fund side managed $6 billion. It was one of Highbridge's most successful ventures.
In October 2015, it was reported that only Highbridge Principal Strategies would be separating from JPMorgan Chase. JPMorgan Chase would keep the Highbridge and its hedge funds operations as well as a minority stake of Highbridge Principal Strategies. In March 2016, the buyout was completed from Highbridge and JPMorgan Chase. This led to an independent firm being spun out as HPS Investment Partners.[11]
In July 2018, Dyal Capital acquired a minority investment in HPS.
In April 2023, Financial Times reported that HPS had almost $100 billion in assets under management after it had raised $12 billion for a new junior credit fund.[12]
In December 2023, HPS confidentially filed for an initial public offering.[13]
On November 21, 2018 LBI Media filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. Afterwards the company created a bankruptcy-exit plan where HPS would take over the company. Bondholders of the company such as York Capital Management and Caspian Capital launched a lawsuit to oppose the deal and stated the plan was product of insider trading and fraud. Both LBI Media and HPS denied the allegation and said the plan followed standard market practices and big boy letter was signed. In April 2019, HPS and the bondholders came to an agreement on the plan after agreeing to boost recoveries for bondholders. HPS then took over LBI Media.[14] [15] [16]
On August 17, 2020, Citigroup filed a lawsuit against HPS, Brigade Capital and Symphony Asset Management, seeking the return their share of $504 million from a near $900 million payment that Citi said it paid by mistake to Revlon's lenders. The payments were related to loans made to Revlon by various private lenders which included the three firms. The lenders took the position that they were not obligated to return the money.[17] On February 16, 2021, a Federal court ruled that the lenders are under no obligation to return any of the monies mistakenly received.[18] However Citigroup asked the United States Court of Appeals for the Second Circuit for an appeal and on September 8, 2022, the court ruled in favour of Citigroup reversing the 2021 ruling.[19] The lenders then requested an appeal but were denied by the court on October 12, 2022.[20]
In June 2023, Jacob Chetrit sued HPS over 850 Third Avenue claiming the firm filed a fraudulent deed. Chetrit claimed when he handed over the property to HPS, he signed a deed showing the balance on the loans to be $320 million. However HPS created a separate deed showing a balance of only $266 million. The reduced loan amount allowed HPS to charge Chetrit more for other expenses like an exit fee and interest costs.[21]