Billionaire investor Bill Ackman has decided to postpone the highly anticipated listing of Pershing Square’s U.S. closed-end fund. According to a notice on the New York Stock Exchange’s website, the initial public offering of Pershing Square USA Ltd., with the ticker PSUS, has been delayed indefinitely. While the firm has not provided a specific reason for the postponement, it is clear that there has been a significant change in plans regarding the fundraising target.
Ackman is now aiming to raise between $2.5 billion to $4 billion for the fund, a considerable decrease from the initial target of $25 billion just a few weeks ago. This revision was outlined in a regulatory filing dated Thursday, which also indicated that the firm is proceeding with the IPO, albeit with the pricing date yet to be announced. Pershing Square has refrained from offering further comments on the matter, leading to speculation about the underlying reasons for the shift in fundraising strategy.
Closed-end funds typically sell a fixed number of shares during their initial public offering and subsequently trade on market exchanges. Unlike traditional open-end funds, closed-end funds can trade at a premium or discount to their net asset value, adding a layer of complexity for investors. Ackman acknowledged the challenges associated with the size of the transaction in a letter to investors, emphasizing the need for careful analysis and judgment given the historical performance of such funds post-IPO.
As a leading asset manager with $18.7 billion in assets under management as of June, Pershing Square has primarily focused on its flagship fund, Pershing Square Holdings, a $15 billion closed-end fund based in Europe. Ackman’s decision to pursue a similar closed-end fund listed on the New York Stock Exchange signals a strategic shift towards expanding the firm’s presence in the U.S. market. Moreover, this move could potentially pave the way for an IPO of Ackman’s management company, further capitalizing on his growing popularity among retail investors.
The publicly traded closed-end fund is expected to invest in a diversified portfolio of 12 to 24 large-cap, investment-grade companies in North America. Ackman highlighted the benefits of managing permanent capital, as it allows for a more focused approach to investing and facilitates long-term decision-making. In contrast to traditional hedge funds, which are often subject to investor redemptions, managing permanent capital enables Ackman to concentrate on building a solid portfolio without the constant pressure of meeting short-term liquidity demands.
The delayed IPO of Pershing Square’s closed-end fund reflects a strategic realignment in Ackman’s fundraising goals and market positioning. Despite the initial setback, the firm’s focus on long-term value creation and strategic investments is evident in its revised approach to capital raising. Ackman’s commitment to offering a unique investment vehicle to Main Street investors underscores his belief in the potential of the U.S. market and his ability to deliver sustainable returns over time.