Bill Ackman, founder and CEO of Pershing Square Capital Management. CNBC
Billionaire investor Bill Ackman has decided to delay the much-anticipated initial public offering (IPO) of Pershing Square’s U.S. closed-end fund. The New York Stock Exchange website announced the postponement, indicating that the listing of Pershing Square USA Ltd., with the ticker PSUS, is on hold until further notice.
Ackman had initially aimed to raise between $2.5 billion and $4 billion for the fund, a significant decrease from the $25 billion target set just a few weeks ago. This information was disclosed in a regulatory filing on Thursday. Pershing Square has declined to provide additional comments, but they did issue a statement to clarify media reports, stating that they are moving forward with the IPO, with the pricing date yet to be announced.
Closed-end funds, unlike other types of investment funds, issue a fixed number of shares during their IPO and these shares then trade on the stock market. The market price of these funds does not always align with their net asset value, which means they can trade at a premium or discount.
In a letter to investors dated July 24, Ackman acknowledged the high sensitivity surrounding the size of this transaction. He noted that given the new structure and the generally poor trading history of closed-end funds, investors need to have significant faith and conduct careful analysis to believe that this new closed-end fund will trade at a premium after the IPO, a rarity in the history of such funds.
As of June, Pershing Square managed assets worth $18.7 billion, with the majority of the capital, $15 billion, in Pershing Square Holdings, a closed-end fund traded in Europe. Ackman's goal is to create a similar closed-end fund listed on the New York Stock Exchange, which could eventually lead to an IPO of his management company.
This public listing is also seen as a strategy for Ackman to leverage his popularity among individual investors. He has amassed over one million followers on social media platform X, where he discusses a wide range of topics, including political issues and social concerns. The closed-end fund is set to invest in 12 to 24 large-cap, investment-grade companies in North America, focusing on "durable growth."
During his roadshow presentation, Ackman emphasized the challenges of managing traditional hedge funds, where investors can withdraw their money at any time. This often necessitates constant fundraising and managing investor relations. In contrast, managing permanent capital allows for a more focused and long-term approach to investments. Ackman pointed out that the ability to maintain a stable investment portfolio without the risk of sudden withdrawals can significantly improve returns.
Ackman is postponing the IPO of Pershing Square’s U.S. closed-end fund, originally set to raise between $2.5 billion and $4 billion. This delay comes as the fund faces scrutiny and high expectations from investors. The listing aims to leverage Ackman's popularity and focus on long-term, large-cap investments in North America.
