Paradise found: Hawaii looks to boost PE pace this year

The system eyes steady growth despite the uncertainty in the broader economy.

Employees’ Retirement System of the State of Hawaii will increase its planned commitments to private equity in 2023.

Many large public pension systems have decided to shrink their commitment pacing schedule amid uncertainty and over-allocation issues. Hawaii is a rare system looking to increase its exposure to private equity this year.

According to a presentation from private equity consultant Hamilton Lane made at the system’s board meeting on March 13, Hawaii will commit between $600 million and $700 million to the asset class in 2023. The board approved the private equity pacing plan in executive session in July, according to meeting minutes.

In 2022, the system committed $600 million to private equity through Hamilton Lane, in the middle range of its pacing plan of $550 million to $650 million, according to the presentation.

Hawaii’s staff made an additional $95 million in commitments across three funds in 2022, according to the presentation.

Buyouts reviewed Hamilton Lane’s presentation. Hamilton Lane said it will continue to focus on making commitments to buyout managers. Commitments will focus on reupping with the $21.5 billion system’s foundation managers, according to the presentation.

Hamilton Lane may also consider placing commitments in excess of $50 million to the system’s top performing managers this year, the presentation said.

According to the presentation, Hawaii had negative cash flow throughout 2022 from its private equity program. Distributions in the fourth quarter of 2022 were down 57 percent from the previous year.

The system made four commitments in the fourth quarter of 2022, according to the presentation. They included:

• $50 million to Vistria Fund V
• $35 million to TorQuest Partners VI
• $50 million to GTCR XIV
• $50 million to Hellman & Friedman Capital Partners XI