Citi, BlackRock Unit Launch €15B European Private Credit Pact

In a significant move reshaping the European private credit arena, Citigroup and BlackRock's credit specialist, HPS Investment Partners, have established a substantial five-year alliance. This strategic collaboration is designed to originate and fund up to €15 billion in private credit financings across the continent and the United Kingdom. The initiative signals a deepening integration between traditional banking powerhouses and alternative asset managers, responding to evolving market demands for flexible and substantial debt solutions.

The newly christened Citi/HPS Private Capital Program will concentrate on providing sub-investment grade financing to a diverse range of corporate borrowers, including those backed by private equity sponsors. The program's scope encompasses both senior and junior debt instruments, with ambitions to broaden its reach into the Middle East in subsequent phases. This expansion reflects the growing appetite for sophisticated credit solutions beyond core European markets.

Under the terms of the agreement, Citigroup will leverage its extensive investment banking network and established client relationships to identify and structure potential transactions. Concurrently, HPS Investment Partners, a prominent global player in direct lending, will deploy its significant capital base and spearhead the critical credit underwriting process. This division of labor capitalizes on each firm's core competencies, aiming for efficient deal execution and robust risk management.

This European venture builds upon a similar successful model initiated by Citigroup in the United States in 2024 through a partnership with Apollo Global Management. That earlier collaboration has already facilitated numerous significant financings, underscoring the efficacy of bank-asset manager alliances in the direct lending space. The replication of this strategy in Europe highlights a global trend towards such synergistic partnerships.

The formation of this pact is particularly noteworthy given the current market environment. Banks are increasingly seeking to maintain lending revenues while mitigating balance sheet strain due to heightened regulatory capital requirements. Simultaneously, private credit funds, like HPS Investment Partners (which became part of BlackRock in 2025 for approximately $12 billion), are actively pursuing larger volumes of deployable capital and attractive deal flow. This partnership effectively addresses both objectives.

The European private credit market has experienced robust growth, with total assets under management in European private debt funds projected to reach hundreds of billions of euros in the coming years. This expansion is driven by a persistent funding gap left by traditional banks and a growing investor base seeking higher yields. The Citi/HPS alliance is well-positioned to capture a significant share of this expanding market, offering tailored financing solutions that cater to the specific needs of mid-market and large corporations across various sectors.