BlackRock buys growth and venture debt provider Kreos

The acquisition will enhance the offering of BlackRock’s Global Credit business, the firm said in a statement.

Kreos has committed more than EUR 5.2bn to more than 550 pan-European and Israeli companies across more than 750 transactions in 19 countries since its inception in 1998. It has 45 people in its team. The firm was previously known as European Venture Partners.

Following the transaction, which is expected to complete in Q3 2023, the investment team will be integrated into BlackRock’s European Private Debt platform. BlackRock will fully own Kreos, and Kreos employees will become employees of BlackRock, a source familiar with the situation told Unquote.

Kreos’s leadership team, including co-founders and general partners Mårten Vading, Raoul Stein and Ross Ahlgren, will continue to be responsible for the execution of its investment strategy.

Moelis & Company acted as exclusive financial adviser and Goodwin Procter provided legal advice to Kreos Capital. Skadden, Arps, Slate, Meagher & Flom provided legal advice to BlackRock.

Kreos Capital held a final close for Kreos Fund VI in 2019 on EUR 700m, surpassing its EUR 600m target and raising EUR 200m more than its predecessor vehicle. LPs in the vehicle include the European Investment Fund, the University of Michigan and the Alaska Permanent Fund Corporation, according to Unquote Data.

Private Debt Investor reported in April 2023 that the firm was on the road for its seventh vehicle and had raised more than EUR 1bn against a EUR 1.2bn target. The fund is expected to hold a final close in September 2023, according to the report.

Kreos has recently provided debt for businesses including Germany-based school and students communication software platform Sdui. Prominent names in its portfolio include UK-based fresh cat food business KatKin, as well as transportation management and ride-hailing application Gett. The GP also invested in Germany-based food delivery platform Delivery Hero before its IPO in 2017.

There will be no substantive changes to the investment strategies or processes for either Kreos’ or BlackRock’s existing funds, a source familiar with the situation told Unquote.

BlackRock has broadened its credit offering through previous acquisitions including US-based Tennenbaum Capital Partners in 2018. The asset manager is also developing its offering for sophisticated retail investors in Europe, as reported.

The acquisition of Kreos comes at a time when many startups are mulling raising debt as opposed to equity. Following the collapse of Silicon Valley Bank and the acquisition of its UK operations via HSBC, several firms including Palatine have seen a gap in the market for growth debt providers, as reported. Former Kreos CEO Neil Pitcher joined Palatine alongside the launch of its growth debt strategy.

At the same time, asset manager consolidation continues to be a theme, particularly when it comes to building scale and exposure in private credit. Recent deals include Nuveen’s acquisition of Arcmont, as well as Franklin Templeton acquiring Alcentra, both of which took place last year.

BlackRock declined to comment. Kreos Capital had not responded to a request for comment at the time of publication.

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