Billionaire Ackman pulls US IPO of Pershing Square USA days before trading to start (updated)

Pershing Square Holdings

31/07/2024 19:47

(New throughout, adds details and background)
    By Svea Herbst-Bayliss
       July 31 (Reuters) - 
    Billionaire investor Bill Ackman on Wednesday scrapped the
planned launch of his new U.S. listed fund, days before Pershing
Square USA was slated to begin trading on the New York Stock
Exchange.
  
        On Tuesday, Ackman downsized the initial public offering
plans for the second time in a week, The launch has seen at
least one prominent pledged investor back out while requiring
fresh regulatory scrutiny.
  
        On social media platform X, where Ackman has 1.3 million
followers, the investor released a four-paragraph statement
saying he and his team had reevaluated the new fund's structure.
  
        "We will report back once we are ready to launch a
revised transaction," he wrote.  A spokesman for Ackman had no
additional comment beyond the statement.
  
        When he unveiled plans in February to offer a cheaper
fund that mimics the investments of his hedge fund for U.S.
based investors, speculation mounted that the IPO could raise as
much as $25 billion in assets.
  
        This would have more than doubled the $19 billion in
assets Ackman's New York-based Pershing Square Capital
Management oversees right now, making it one of the biggest IPOs
in years. But it also sparked concern among potential investors
about the fund's structure, where the new cash would be invested
at a time the market was storming higher, and who would be doing
the investing.
  
        By last week, Ackman dramatically scaled back the
outlook for the raise, telling investors in his management
company that it would be capped at $10 billion. By this Tuesday,
Ackman said he expected to raise around $2 billion in assets.   
  
        "While we have received enormous investor interest in
(Pershing Square USA) PSUS, one principal question has remained.
Would investors be better served waiting to invest in the
aftermarket than in the IPO?," Ackman wrote on Wednesday.
        Ackman said he has held nearly 100 meetings with top
hedge and mutual funds and there had been considerable interest
in the new vehicle, the first he planned to launch since raising
$2.9 billion for Pershing Square Holdings a closed-end fund that
was listed in Amsterdam a decade ago.
  
        But he acknowledged the structure of the fund raised
concerns because these kinds of vehicles often trade at a
discount or premium to the assets held in the fund. He said his
firm committed $500 million as an anchor investment to what he
is calling a U.S.-listed investment holding company. 
  
        Last week Ackman wrote that investors including hedge
fund Baupost Group had pledged to put money in. But Baupost, run
by Seth Klarman and noted for staying out of the headlines, said
that now it would not buy into the fund. Some said Baupost's
exit might have pressured other investors to stop short.
  
        The letter, which Ackman had expected to remain private,
had to be filed with regulators, a move that caused an initial
delay moving the start of trading from this week to next week.
Ackman had expected to ring the bell to start trading at the
exchange next week.
  

 (Reporting by Svea Herbst-Bayliss in Boston and Arasu Kannagi
Basil in Bengaluru; Editing by Sriraj Kalluvila)
 ((ArasuKannagi.Basil@thomsonreuters.com;))