STORY: Larry Fink's BlackRock announced a major $12 billion acquisition of private credit firm HPS Investment Partners on Tuesday.

The all-stock deal to buy HPS expands the world's largest asset manager into the red-hot market of private credit, an asset class expected to grow to $2.6 trillion by 2029.

Private credit - in which institutions other than banks lend to companies - has seen a boom in recent years as stricter regulations have made it costlier for banks to finance riskier loans.

Fink, who co-founded BlackRock in 1988, has previously outlined private credit as a future "growth driver" at the firm, saying it could mitigate the economic impact of high U.S. government debt and wide deficits.

HPS, once part of JPMorgan, is a massive player in the private credit space, with about $148 billion in assets under management.

BlackRock manages $11.5 trillion in assets, with an existing private credit platform of $85 billion.

The deal is the latest in an acquisition spree for BlackRock, which has spent roughly $28 billion this year on deals integrating public and private markets.

The move also comes amid speculation Fink may eventually step down from leading BlackRock, despite saying recently that he was not thinking about retiring.

Shares of BlackRock rose in Tuesday morning trading following news of the deal.