Hawaii looks to ramp PE commitments up to $1bn in 2024

This is a steep increase from how much it committed in 2023, and bodes well for managers looking for capital.

Employees’ Retirement System of the State of Hawaii will commit between $800 million to $1 billion in private equity in 2024, over a 20 percent hike from what the pension committed the previous year.

Hawaii’s increased pacing plan will be welcomed news for managers shopping for new funds in what remains a constrained fundraising environment.

The system committed $660 million to 13 funds and three co-investments in 2023, according to a presentation at the pension’s February board meeting from Hamilton Lane, which manages most of the system’s private equity program.

Hamilton Lane said the system’s focus would concentrate on re-ups with its core managers, along with an increase in the size of its individual commitments.

Hawaii committed $50 million to 12 of its primary fund commitments in 2023, according to the presentation.

Most of its commitments went to mid-market funds like Wynnchurch Capital Partners VI, Aurora Equity Partners VII and Kelso Investment Associates XI.

The system’s focus will remain on buyouts investments but could include opportunities in venture capital and growth equity managers, Hamilton Lane said.

Hamilton Lane has discretionary authority over most of Hawaii’s private equity program.

According to the presentation, Hamilton Lane plans to place between $630 million to $750 million to managers next year.

Hawaii’s investment staff has the discretion to commit between $120 million to $200 million in 2024, the presentation said. This includes potential commitments to the system’s HiTIP program, which steers capital to venture capital funds investing in Hawaii-based early-stage technology companies.

According to the presentation, the system’s private equity portfolio has a NAV of $4.3 billion, as of the end of September 2023. Since inception, the portfolio has earned a 12.27 percent net IRR.

Hawaii’s paid-in capital totaled $536.5 million in 2023, against $434.8 million in distributions, resulting in a negative cashflow of $101.7 million, according to Hamilton Lane.

According to Buyouts’ database, Hawaii currently allocates 19.6 percent of its total fund to private equity, above its 19 percent target.