The $24B Employees’ Retirement System of the State of Hawaii earmarked up to $1B to its private equity pacing for fiscal year 2025, in efforts to maintain healthy liquidity for the portfolio.
While the pension plan has set a pacing range of $600M to $1B, its consultant, Hamilton Lane, recommended it target the lower end of the pacing range due to uncertainty around private equity’s liquidity.
Within the pacing plan, the fund will allow the consultant to make between $350M to $850M in discretionary primary commitments and the investment staff between $100M to $200M in discretionary commitments.
London Uk-based Stafford Capital Partners’ Stafford Ho’oulu Fund, for which Hawaii ERS is the only limited partner, has been allotted $50M. The program is designed to make co-investments along with primary investments to venture capital, mid-sized buyout and growth equity funds, according to the board documents.
The pension plan will also continue making commitments to North American GPs and opportunistically adding relationships in Asia and Western Europe. Information technology (28%) and health care (16%) remain the top two private equity sector exposures.
The pension plan currently allocates 19.2% to its private equity portfolio, over its target allocation of 18.2%. As of Dec. 31, 2024, private equity held 20% of the total portfolio.
The consultant pointed out that Hawaii ERS’ private equity portfolio outpaced its contributions over distributions last year, noting the pension plan made $664M in contributions but only received $598.9M in distributions, which totaled $65.1M outflow of cash for the year.
The pension plan is seeking to maintain a cash allocation at 5%, as the investment staff focuses on liquidity due to the uncertainty around both interest rates and inflation. Further, the delayed impacts of tariffs in the economy could also be a potential headwind the portfolio may face, noted the investment staff.
