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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Look, Bill Ackman isn’t everyone’s cup of tea. The man who claims to have inspired the Go! Go! Ackman manga seems to have contracted a severe case of online brain rot, and now spends an inordinate amount time poasting.
Ackman himself thinks the consequent “notoriety” is a boon. Earlier this month, he told potential investors in a presentation for the IPO of his new investment vehicle Pershing Square USA:
I will be completely unrestricted in terms of my ability to update our shareholders about developments in the portfolio.
Investors seem more sceptical. Here’s Bloomberg, reporting on a letter Ackman sent to investors yesterday, which appeared in an SEC filing today:
Billionaire hedge-fund manager Bill Ackman’s initial public offering of Pershing Square USA Ltd., a US closed-end fund, is poised to bring in far less than the $25 billion he floated two weeks ago.
The head of Pershing Square expects the fund will file with US regulators to raise $2.5 billion to $4 billion, according to a filing Thursday. The ultimate deal size will depend on demand over the coming three business days, with the fund slated to price on Monday evening, though the firm has placed a cap of $10 billion on the sale.
Ackman said the scaled back expectations for the offering should help with the sale. “The $25 billion number in the media initially anchored investors in thinking the deal would be too large,” he wrote in a July 24 letter to investors that was included in the filing. “Ultimately, I expect this ‘anchoring’ to be helpful to the final outcome.”
Crack out the tiny violins, etc.
Perhaps more interesting, however, is the bit of the filing before the letter. It appears Ackman’s own company’s lawyers are also sceptical of his free-flowing approach to communications. With Alphaville’s emphasis:
On July 24, 2024, the communication attached as Appendix A was sent to a limited number of strategic institutional and high net worth investors in Pershing Square Holdco, L.P., which owns 100% of the Company’s investment manager, Pershing Square Capital Management, L.P. (the “Manager”) by William A. Ackman, the Chief Executive Officer of the Manager and the Company. Mr. Ackman sent Appendix A as an internal communication to the investors in Pershing Square Holdco, L.P. and therefore did not believe that it would require public disclosure.
You should not consider the statements in the communication attached as Appendix A in making your investment decision with respect to the Offering, including, in particular:
– The statements regarding the absence of key man risk. See “Risk Factors — Reliance on the Manager Risk — Key Personnel Risk” in the Company’s preliminary prospectus.
– The statements regarding the post-Offering trading dynamics, including with respect to market demand, trading discounts or premiums or trading volume. Shares of closed-end investment companies frequently trade at a discount from their net asset value. See “Risk Factors — Investment and Market Discount Risk” in the Company’s preliminary prospectus.
– The statements regarding the Manager’s historical performance. See “Appendix A – Supplemental Performance Information of the Affiliated Funds” to the Company’s preliminary prospectus.
– The statements regarding indications of interest from investors and any investor’s rationale for participation or non-participation in the Offering. Indications of interest are not binding agreements or commitments to purchase. Any investor may determine to purchase more, less or no Common Shares in the Offering. In addition, the underwriters may determine to sell more, less or no Common Shares in the Offering to any investor.
– The statements regarding the Pershing Square Tontine Holdings, Ltd. IPO.
The Company specifically disclaims the statements made by Mr. Ackman.
Yep, that’s Pershing Square USA basically disavowing a letter its CEO sent to prospective investors in a filing to the SEC.
We suspect the main issue for Pershing’s lawyers was Ackman kiiinda promising that his new closed-end fund Pershing Square USA would trade at a premium, and that there wouldn’t be any key man risk — two obvious risk factors that are indeed disclosed in Pershing Square USA’s prospectus.
But still, ouch.
By the why, while we have you — which family office is Ackman talking about here? Guesses in the comments.
We have already had some orders from a diverse group of investors including Baupost Group for $150m, Putnam, a highly regarded mutual fund complex for $40m which they indicated would grow if the transaction is smaller than $10 billion, and Teachers Retirement System of Texas for $60m which would increase if the transaction is larger. One family office that has known the firm for 15 years has expressed interest in buying 9.9% of the ultimate deal size, which they said would be “small” even at $1 billion for them. This family would be a highly strategic partner for PS Inc., particularly for another transaction which we are working on which will share with the group. The family’s assets are in excess of $65 billion.
Further reading
— Bill Ackman or American Psycho? Take the quiz (FTAV)