Citigroup and HPS Investment Partners — the private credit arm BlackRock acquired in July 2025 — unveiled a €15 billion ($17.5 billion) Private Capital Program on May 18, 2026, to originate direct loans to companies across Continental Europe, the United Kingdom and the Middle East over an initial five-year period. The partnership is the European sequel to Citi’s $25 billion direct-lending pact with Apollo announced in September 2024, and it formalizes a pattern that has reshaped corporate debt markets: big banks originate, private credit funds hold the paper.
Inside the program
According to the joint announcement, Citi’s Investment, Corporate and Commercial Bank teams will source opportunities from their existing borrower relationships, while HPS contributes capital from its private credit pools and structures the financings. The program targets sub-investment-grade debt — the leveraged loan and middle-market territory that has migrated steadily from bank balance sheets to private funds over the past decade.
“This Program is designed to directly support our clients’ strategic objectives across the EMEA region by combining Citi’s deep client relationships and origination strength with their significant capital and structuring expertise,” said John McAuley, Citi’s Co-Head of Debt Capital Markets, in the joint release.
Matthieu Boulanger, HPS Partner and Head of Europe, framed it from the asset manager’s side: “This collaboration will enable us to leverage Citi’s extensive network and origination pipeline in EMEA, further strengthening our ability to deliver tailored financing options to a broad range of borrowers.”
The Apollo template — now with BlackRock muscle
The structure isn’t new. Citi pioneered it in September 2024 with Apollo, signing what was then billed as a “first-of-its-kind, scaled direct lending program” focused on North America. What is new is the partner.
BlackRock closed its $12 billion all-stock acquisition of HPS on July 1, 2025, instantly creating a private-financing solutions platform with roughly $190 billion in assets under management when combined with BlackRock’s existing private credit business. HPS alone managed about $148 billion at the time of the deal announcement. The Citi-HPS program is the first marquee origination tie-up for the combined platform — and a signal that BlackRock intends to compete head-on with Apollo, Ares and Blackstone for the bank-channel deal flow that has become the most coveted funnel in private credit.
| Program | Bank | Private credit partner | Size | Geography | Announced |
|---|---|---|---|---|---|
| Citi-Apollo Direct Lending Program | Citigroup | Apollo (with Mubadala, Athene) | $25.0B | North America (initial) | Sep 26, 2024 |
| Citi-HPS Private Capital Program | Citigroup | HPS (BlackRock subsidiary) | €15.0B (~$17.5B) | EMEA (5-year initial) | May 18, 2026 |
Why the structure works for both sides
The economics are reasonably clear once you separate origination from balance-sheet capacity. Banks face capital charges on held loans that have only gotten heavier as regulators finalize the Basel III “endgame” rules. A loan that earns a wide spread on day one can still be a bad return on the bank’s capital once you account for the equity it must hold against it. By passing the paper to a private credit fund — whose investors (insurers, pensions, sovereigns) want yield and don’t operate under the same capital regime — both sides take a piece of the trade.
For Citi, the program protects the client relationship: when a borrower needs financing the bank can’t profitably hold, Citi can now offer a private credit alternative without sending the client to a rival sponsor. For HPS, it solves the central problem of any direct lender at scale — deal flow. Private credit AUM globally has grown from roughly $300 billion in 2010 to about $1.6 trillion by year-end 2024, per Preqin data; finding enough good deals to deploy that capital is harder than raising it.
Europe is the new battleground
The geography matters. Private credit penetration in Europe still lags the U.S. by a wide margin: direct lending funds account for an estimated 15–20% of leveraged finance origination across the EU and UK, compared with north of 80% in U.S. middle-market sponsor deals, per industry tracking. European corporates have historically leaned on bank revolvers and the broadly syndicated loan market, but the same regulatory and capital pressures that pushed U.S. banks to step back are now squeezing European lenders.
For BlackRock-owned HPS, getting a marquee bank origination channel locked in for EMEA is a strategic coup. Apollo, Ares, Blackstone and Goldman Sachs Asset Management are all chasing the same European deal flow, often through their own bank tie-ups. A five-year program with Citi — one of the few truly global investment banks with deep EMEA corporate coverage — gives HPS a structural advantage to deploy capital faster than competitors who have to source deals one at a time.
What to watch from here
- Deal-by-deal disclosure. Neither side disclosed fee splits or capital tranching. Watch first-year origination volume — if Citi-Apollo’s first 12 months are any guide, expect the initial headline trades (typically $300M–$1B+ unitranche financings for sponsor-backed European companies) within two quarters.
- Regulatory response. European supervisors at the ECB and the Bank of England have flagged concerns about private credit interconnectedness with the banking system. A formal origination program rather than ad-hoc collaboration may invite closer scrutiny.
- Copycat partnerships. JPMorgan, Goldman Sachs and Morgan Stanley have all built their own private-credit-adjacent programs. Expect at least one more major U.S. bank to announce a European tie-up with an alternatives manager within the next year.
- Pricing pressure. Spreads on European unitranche loans have already tightened materially over the past 12 months as competition has intensified. Another ~$17 billion of dry powder formally aimed at the region won’t help that dynamic for lenders.
Sources
- HPS Investment Partners press release: “Citi and HPS Announce €15 Billion Private Capital Program to Expand Direct Lending in EMEA,” May 18, 2026.
- Reuters: “Citi partners with BlackRock’s HPS for $17.5 billion private credit program,” May 18, 2026.
- Citigroup press release: “Citi and Apollo Announce $25 Billion Private Credit, Direct Lending Program,” September 26, 2024.
- BlackRock press release: BlackRock completes acquisition of HPS Investment Partners, July 1, 2025.
- Preqin: “Private debt AUM to reach $2.8tn by 2028.”
- Bank of England Financial Stability Report (private credit interconnectedness commentary).
Disclosure: This article was produced with AI assistance and reviewed before publication. It is for informational purposes only and is not investment advice.