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CalPERS’ emerging manager program backs next GP

Canyon Partners, which oversees CalPERS’ emerging manager platform, chose an industrial real estate-focused firm.

The California Public Employees’ Retirement System is investing in BKM Capital Partners in the latest round of commitments for its emerging manager program, according to an announcement Monday.

Through the Canyon Catalyst Fund (CCF), a platform managed by Los Angeles-based Canyon Partners, the country’s largest public pension system invests in small private equity real estate firms. Irvine, California-based BKM, founded in 2013, is the fifth manager in CCF, according to the statement.

In a joint venture with the fund, BKM will target industrial property acquisitions in urban California markets. CCF allocates between $50 million and $150 million per emerging real estate manager, but the exact amount of the commitment was not disclosed. Neither Canyon nor CalPERS could be reached for comment.

“We are honored to have been chosen by Canyon to partner with the Canyon Catalyst Fund to invest in California,” Brian Malliet, BKM’s founder, said in Monday’s statement. “CCF‘s outstanding reputation of cultivating emerging managers makes them the ideal partner to further develop our growing industrial platform.”

CalPERS’ real estate emerging manager program stipulates that general partners should have assets under management below $1 billion; focus on investing in urban California investment; and be on or below their third separate account or institutional joint venture. In July 2015, CalPERS increased its commitment to CCF Fund from $275 million to $375 million, according to the pension system.

BKM closed its debut commingled fund, BKM Industrial Value Fund I, an industrial-focused, value-add vehicle, in February 2016 on $105 million, PERE previously reported. The firm is now seeking to raise $300 million for the successor vehicle, which was launched earlier this month. With capital from the fund series, the firm invests in light industrial real estate – which Malliet defined as properties under 100,000 square feet – in the western US. These properties typically house groups such as cleaning companies that service larger industrial assets.

BKM currently manages $130 million in assets.