Billionaire investor Bill Ackman has decided to postpone the highly anticipated listing of Pershing Square’s U.S. closed-end fund. The New York Stock Exchange’s website announced that the initial public offering of Pershing Square USA Ltd., with the ticker PSUS, has been delayed indefinitely. This delay follows a regulatory filing dated Thursday, in which Ackman revealed that he is now aiming to raise $2.5 billion to $4 billion for the fund, a significant reduction from the initial target of $25 billion. Despite the lack of a specific date for the IPO, Pershing Square has confirmed that they are moving forward with the offering.
Closed-end funds operate by selling a fixed number of shares during their IPO, which then start trading on market exchanges. These funds may trade at a premium or discount to their net asset value, creating a level of uncertainty for investors. According to Ackman, there is tremendous pressure and scrutiny surrounding the size of the transaction, especially considering the historical trading patterns of closed-end funds. In a letter to investors dated July 24, Ackman emphasized the need for careful analysis and judgment from investors to recognize the potential for the fund to trade at a premium post-IPO.
Pershing Square currently manages $18.7 billion in assets, with the majority of its capital allocated to Pershing Square Holdings, a $15 billion closed-end fund trading in Europe. Ackman’s objective with the proposed Pershing Square USA Ltd. is to offer a similar closed-end fund listed on the New York Stock Exchange, potentially opening the door for an IPO of his management firm. The fund is expected to focus on investing in 12 to 24 large-cap, investment-grade companies in North America that exhibit durable growth. Ackman believes that managing permanent capital allows for a more concentrated focus on the portfolio and facilitates a long-term investment approach, contrasting with the challenges associated with traditional hedge funds.
The decision to publicly list Ackman’s fund is viewed as a strategic move to engage Main Street investors, leveraging his substantial following on social media platform X. With over one million followers, Ackman has used his platform to comment on various social and political issues, enhancing his public profile. By offering a publicly traded closed-end fund, Ackman aims to foster greater transparency and accessibility for retail investors. In a roadshow presentation, Ackman highlighted the difficulties of managing traditional hedge funds, where frequent investor withdrawals can disrupt investment strategies and necessitate continuous fundraising efforts.
The postponement of the Pershing Square USA Ltd. IPO reflects the challenges and complexities of launching a closed-end fund in the current market environment. Bill Ackman’s strategic decision to delay the listing and revise fundraising targets underscores the need for caution and prudence in navigating the intricacies of the investment landscape. Despite the setbacks, Ackman remains committed to delivering value for investors and reshaping the traditional paradigms of capital management.