Billionaire hedge fund manager Bill Ackman aims to raise $5 billion for his US-listed closed-end fund, including $2 billion from well-known institutional investors anchoring the deal, according to people with knowledge of the offering.
The initial public offering of the closed-end fund will coincide with the IPO of his hedge fund firm, Pershing Square Capital Management. As part of the deal, Pershing will give the fund investors some shares in Pershing Square Capital for free.
The firm’s partners will give away up to 10% of their shares as part of the dual listing, which could come as early as the first quarter, the people said.
A Pershing Square spokesperson declined to comment.
More details are expected to emerge in early December, when the firm will hold a session for bank analysts, the people said.
Ackman has been laying the groundwork in recent years for what would be a rare market debut of a large hedge fund manager. Last year, he agreed to sell a 10% stake in Pershing in a private deal that valued it at more than $10 billion ahead of the planned IPO, which had been expected as soon as late 2025.
Ackman, 59, made a name for himself as an activist investor with an outsize presence on social media and a willingness to take concentrated positions in a relatively small roster of stocks. He has a net worth of $8.5 billion, according to the Bloomberg Billionaires Index.
Most of Pershing Square’s assets are in Pershing Square Holdings Ltd., a closed-end fund that trades in London, holding 15 positions and managing $19.3 billion as of Oct. 31. It generated a return of more than 17% this year through Nov. 18.
Ackman said last year he planned to list a similar fund on the New York Stock Exchange called Pershing Square USA Ltd. He had a target of as much as $25 billion, but temporarily pulled the listing after only raising about $2 billion. The closed-end fund structure made it challenging to raise money because these funds often trade at a discount to their underlying investments. Potential buyers put off investing in the IPO thinking they could purchase the fund cheaper after the listing.
This new structure — adding the free shares in the firm — is designed to mitigate that issue.
The firm has expanded its business — and likely its valuation — since the stake sale. In May, it struck a deal to boost its Howard Hughes Holdings Inc. position to almost 47%, as part of a plan to build an insurer and expand the real estate company into a conglomerate with controlling stakes in other public and private businesses. Ackman likened the model to Warren Buffett’s Berkshire Hathaway Inc., which has greatly benefited from using insurance company holdings to provide low-cost capital for other investments.
Ackman also plans on raising a hedge fund that will make so-called asymmetric trades, where the initial expenditure is small but the potential payout is big — a strategy that made Pershing Square a lot of money in the past.
In February 2020, Ackman bought a type of insurance sold by Wall Street banks that would pay off if corporate bond prices fell, a way to hedge what he saw as the coming disaster of Covid-19 for the US and global economies. He spent $27 million on this protection and within three weeks made 100 times his money.
