Bill Ackman has announced a significant reduction in the fundraising target for his new US-listed fund, Pershing Square USA, citing investor apprehensions about the fund’s structure and cash deployment strategy, according to reports.
In a letter filed with the Securities and Exchange Commission, Ackman told investors this week there will be a “hard cap on size at $10bn” and that he expects to raise between $2.5bn and $4bn, rather than the $25bn initially anticipated.
“There is enormous sensitivity to the size of the transaction,” the hedge fund manager wrote in a letter to his investors. “The ultimate deal size will depend on how demand builds Thursday, Friday and Monday.”
Ackman sent the letter to shareholders in his management company to provide transparency about the process, following legal advice that the document should be made public.
In an unusual move, Pershing Square USA said it “specifically disclaims” Ackman’s statement, in the same SEC filing which included the letter.
Earlier this year, Pershing Square USA, which is expected to start trading on the New York Stock Exchange next week under the symbol PSUS, was said to be on track to become one of the biggest public listings ever and possibly more than double the size of his firm’s assets.
However, Ackman, who currently oversees $19bn in assets, is now prepared to raise significantly less capital for PSUS, but is urging investors to commit promptly.
Ackman highlighted that the fund’s market performance is more crucial than the size of the IPO. “We believe that the most important factor for creating long-term value for Pershing Square Inc is not the size of the PSUS IPO, but how it trades in the market,” he stated.
“Today would be ideal,” he told investors about when to send cash, noting he would be “grateful” if they would participate in the fundraising, with his firm having already committed $500m.
Closed-end funds, which trade on exchanges without issuing or redeeming new shares, often face investor scepticism due to their tendency to trade at a premium or discount relative to their holdings. Last year, no new closed-end funds were launched, according to Investment Company Institute data, while there were only six launches in 2022.
Ackman is targeting both institutional and retail investors, leveraging his social media presence on platforms like X to promote the fund. Prominent investors, including mutual fund complex Putnam and the Teacher Retirement System of Texas, have already committed to Pershing Square USA.
