Pershing Square Capital Management, the New York-based investment firm led by Bill Ackman, has concluded its PSVII funds, a finite-life co-investment vehicle established to hold shares in Universal Music Group NV (UMG).
The funds will now distribute approximately 47 million UMG shares — representing 2.6% of the company’s equity — to non-Pershing Square-affiliated limited partners.
The decision to distribute UMG stock instead of cash aligns with Pershing Square’s view that the music company is significantly undervalued at its current price. The tax-free distribution allows limited partners to maintain direct exposure to UMG’s equity while avoiding immediate capital gains liabilities.
In a press statement, Bill Ackman and Pershing Square emphasised their long-term confidence in UMG, noting the firm’s continued ownership of roughly 140 million shares, representing 7.6% of the company. These shares are held within Pershing Square’s core funds, including Pershing Square Holdings, Pershing Square, and Pershing Square International, as well as by Ackman, his affiliates, and Pershing Square employees.
Pershing Square initially acquired its UMG stake in 2021, purchasing 10% of the company from Vivendi at a price of €18.28 per share, including capitalised costs. Over the three-and-a-quarter years since the investment, UMG has delivered a total return of 46%, including €1.66 per share in dividends, outperforming major benchmarks like the S&P 500 (37% return) and the Amsterdam Exchange Index (21% return) over the same period.
UMG remains the largest holding across Pershing Square’s funds with Ackman and his affiliates confirming that they are not selling any shares in connection with the PSVII fund distribution.
In the statement, Pershing Square wrote: “We continue to see Universal Music Group as a compelling investment with significant potential for growth and value creation over time.”
The PSVII funds were established in September 2021 with a finite term ending 31 January, 2025, to hold UMG shares acquired during Pershing Square’s negotiated transaction with Vivendi. Since inception, the PSVII funds have generated a net value increase of 52% in euros (33% when converted to US dollars), reflecting their UMG holdings’ strong performance and dividend reinvestments.
