Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC
Billionaire investor Bill Ackman is postponing the listing of his heavily scrutinized Pershing Square U.S. closed-end fund, according to a notice posted on the New York Stock Exchange’s website.
The initial public offering of Pershing Square USA Inc., which has the ticker symbol PSUS, according to its website, has been delayed until the announcement date.Ackman is now seeking to raise between $2.5 billion and $4 billion for the fund, according to a regulatory filing on Thursday, far short of the $25 billion target he set just weeks ago.
Pershing Square declined to comment further. The company issued a statement “to clarify the reports” and said it was moving forward with its IPO “with a scheduled pricing date.”
Closed-end funds sell a set number of shares at their IPO and then trade on a market exchange after their debut. The price of the fund does not necessarily match the net asset value of the shares, so the fund may trade at a premium or discount.
“There is great sensitivity to the size of the transaction,” Ackman wrote in a July 24 letter to investors that was included in the filing. “In particular, given the novelty of this structure and the very negative trading history of closed-end funds, it will require a great deal of faith and ultimately careful analysis and judgment for investors to perceive this closed-end company as likely to trade at a premium following an IPO, something that has rarely happened before in history.”
Pershing Square had $18.7 billion in assets under management as of the end of June, with most of the money invested in a $15 billion closed-end fund traded in Europe, Pershing Square Holdings Ltd. Mr. Ackman is seeking to offer a similar closed-end fund to trade on the New York Stock Exchange, which could pave the way for an IPO for his firm.
Ackman’s listing is seen as a move to leverage his popularity among public investors, after he gained more than 1 million followers on the social media platform X where he comments on a range of issues from anti-Semitism to the presidential election. The listed, closed-end fund plans to invest in 12 to 24 large, investment-grade “sustainable growth” companies in North America.
In his public Roadshow presentation, Ackman highlighted the difficulties of running a traditional hedge fund, where investors can withdraw their money at any time, which could result in continued fundraising and investor comfort. The advantage of running a permanent fund is that it allows for more focus in the portfolio and a longer-term approach to investing.
“If you want to invest in companies for the long term, managing a portfolio where money can flow in and out is a big challenge. Actions can have a big negative impact on returns,” Ackman said.
—CNBC’s Leslie Picker contributed reporting.
