Billionaire investor Bill Ackman has postponed the listing of Pershing Square’s U.S. closed-end fund, Pershing Square USA Ltd., on the New York Stock Exchange. The initial public offering of the fund, with the ticker PSUS, has been delayed until a date to be announced. Ackman is now aiming to raise $2.5 billion to $4 billion for the fund, significantly lower than the original $25 billion target from a few weeks ago. Closed-end funds sell a fixed number of shares during their IPO and trade on market exchanges, potentially at a premium or discount to their net asset value.
In a regulatory filing, Ackman expressed that there is significant sensitivity to the size of the transaction, particularly given the closed end fund’s history of trading negatively. Pershing Square, with $18.7 billion in assets under management as of June, is seeking to offer a similar closed-end fund listed on the NYSE, which could eventually lead to an IPO of Ackman’s management company. Ackman’s decision to publicly list his fund is seen as a strategic move to leverage his following among Main Street investors, given his sizeable social media presence and commentary on various issues.
The publicly traded closed-end fund is expected to invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America. In a roadshow presentation made public, Ackman highlighted the challenges of managing traditional hedge funds, where investors can withdraw their money at any time, requiring constant fundraising. Managing permanent capital allows for a more focused portfolio management approach, enabling a long-term investment strategy. Ackman emphasized the significance of managing a portfolio with stable capital for maximizing returns and avoiding negative impacts from investor actions.
Ackman’s decision to delay the listing of Pershing Square’s closed-end fund comes amid uncertainties around the fund’s size and potential market reaction. The firm’s statement clarifying press reports confirmed that the initial public offering is proceeding with the pricing date yet to be announced. The delay in the IPO reflects the cautious approach Ackman is taking in light of the fund’s structure and historical trading patterns of closed-end funds, which often trade at a discount to their net asset value.
The postponement of Pershing Square’s closed-end fund listing indicates Ackman’s strategic reevaluation and adjustment of the fund’s size and target capital. By aiming to raise $2.5 billion to $4 billion, Ackman is taking into account the challenges associated with closed-end funds trading at a premium post-IPO. The move to list a similar closed-end fund on the NYSE signals Ackman’s intent to offer a more stable and long-term investment vehicle for Main Street investors, leveraging his social media following and commentary to attract investor interest. Ackman’s focus on durable growth companies in North America and long-term investment strategy underscores his commitment to optimizing returns and portfolio management in a stable capital environment.
