Investcorp backs $261m BKM recapitalisation

The firm has used the secondaries market to institutionalise its investor base and is increasingly appearing as a buyer in real estate deals.

After carrying out GP-led processes on two of its own funds, Investcorp has entered the fray as a lead buyer.

The Bahrain-headquartered alternatives manager, which has $34.2 billion in assets under management, anchored a continuation fund that bought the remaining assets in 2013-vintage BKM Industrial Value Fund I, according to a statement.

The portfolio of seven industrial assets, located in Arizona and Washington, was acquired for $261 million as part of a process advised by CBRE. Newport Beach-based BKM rolled its stake into the new vehicle and will continue to manage the assets.

Limited partners were given the option to roll but chose to sell due to favourable pricing and the maturity of the fund, according to a source familiar with the deal. Investcorp also agreed to commit follow-on capital as required for new developments.

BKM came to market in early 2020 with the intention of selling the portfolio of assets to another real estate manager, but it put the sale on hold due to the pandemic, Secondaries Investor understands. An increase in appetite for industrial properties during 2021 meant the secondaries process secured a higher price than in the proposed pre-covid sale.

Investcorp did not wish to comment on the extent of its activity in the secondaries market. Two real estate advisers said that the firm has started to appear more frequently as a buyer on secondaries deals.

The firm has been an active proponent of using the secondaries market to institutionalise its investor base. In January 2019, it combined six assets acquired on a deal-by-deal basis in a $1 billion GP-led deal led by Coller Capital. The same month, HarbourVest Partners backed a $185 million continuation fund deal on its 2007-vintage technology fund and made a stapled commitment to a new vehicle.

Real estate secondaries transactions representing $8.5 billion of net asset value either closed or were placed under contract in 2020, according to research by Landmark Partners. This figure topped the previous record of $8.2 billion in 2015, with recapitalisations accounting for 66 percent.