Billionaire investor Bill Ackman, founder and CEO of Pershing Square Capital Management, has decided to postpone the initial public offering (IPO) of Pershing Square’s U.S. closed-end fund, as announced on the New York Stock Exchange’s website. The fund, named Pershing Square USA Ltd. with the ticker PSUS, was originally set to be listed, but the date has now been delayed with no specific timeline provided for the rescheduled IPO.
According to a recent regulatory filing, Ackman is aiming to raise between $2.5 billion to $4 billion for the fund, a significant decrease from the initial target of $25 billion that was set a few weeks ago. This adjustment in fundraising goals has raised questions about the size and scale of the transaction, especially given the unique structure of closed-end funds and their historical trading performance.
Closed-end funds differ from traditional open-end mutual funds in that they have a fixed number of shares offered during the IPO and trade on exchanges like stocks. This can sometimes lead to discrepancies between the fund’s price and its net asset value, resulting in trading at a premium or discount. Ackman acknowledged the challenges associated with closed-end funds in a letter to investors, emphasizing the need for careful analysis and judgment by potential investors.
Pershing Square currently manages $18.7 billion in assets, with a significant portion held in Pershing Square Holdings, a $15 billion closed-end fund traded in Europe. Ackman’s plan to list a similar closed-end fund on the NYSE is part of a strategic move that could potentially pave the way for an IPO of his management company in the future.
The decision to postpone the IPO of Pershing Square’s closed-end fund comes at a time when Ackman is seeking to engage more with Main Street investors, leveraging his social media presence and public commentary on various issues. The fund is expected to focus on investing in large-cap, investment-grade companies with a strong track record of durable growth in North America.
In a public roadshow presentation, Ackman highlighted the advantages of managing permanent capital compared to traditional hedge funds, which are subject to investor redemptions and constant fundraising pressures. By having stable capital, Ackman can maintain a long-term investment approach and concentrate on building a resilient portfolio without the volatility of frequent capital inflows and outflows.
Overall, the postponement of Pershing Square’s closed-end fund IPO reflects Ackman’s strategic adjustments in response to market conditions and investor sentiments. The move underscores the importance of careful planning and investor confidence in navigating the complexities of closed-end fund offerings in today’s financial landscape.
