BlackRock’s Kapnick Says Big Firms to Gain From Credit Turmoil

BlackRock Inc.’s Scott Kapnick, who runs the firm’s private lending business, said the biggest players will benefit from the current industry turmoil, while some smaller lenders may be left behind.

“Most of the large managers are very good at managing risk, and players with scale will continue to benefit from this period,” Kapnick, CEO of HPS Investment Partners, said at a Bloomberg Invest event on Wednesday. For smaller firms pursuing more niche strategies, “that’s a harder point to have that happen,” he said.

Private credit managers have faced weeks of questions from investors about the $1.8 trillion industry’s resilience to losses, a rise in defaults and bets on the software industry now being disrupted by artificial intelligence. Private credit’s biggest firms, from Blue Owl Capital Inc. to Blackstone Inc., are facing a wave of skittish retreats from retail investors, sending their stocks off to their worst start in a decade.

Kapnick identified “pockets” of difficulty some loan companies face, especially among smaller borrowers who are vulnerable to the triple threat of tariffs, labor costs and high interest rates. He said that software businesses that can be disrupted more easily by artificial intelligence will also be in a difficult situation.

“There’s been a lot of pretty highly priced capital invested in software from very smart private equity and very smart institutional investors, really in ’21, ’22,” said Kapnick, who co-founded HPS and later sold the business to BlackRock for $12 billion last year. “And four or five years later, as you work your way through this system, you can see pockets there.”

Stock and bond investment giant BlackRock is in the midst of a major transformation to catch up with leading private firms. Chief Executive Larry Fink spent more than $25 billion betting that private credit and infrastructure would become much larger assets for large institutional and ordinary individual investors. BlackRock’s acquisition of HPS is central to the firm’s progress.

“There was very little overlap,” Kapnick said of the firm’s integration.

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