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Bill Ackman has slashed his fundraising target for the initial public offering of his US investment fund Pershing Square USA by as much as 90 per cent, falling far short of the initial target of $25bn.
The billionaire hedge fund manager said in a letter filed with the Securities and Exchange Commission that he expected to raise between $2.5bn and $4bn, although the total haul could increase to $10bn depending on how marketing efforts went in the coming days.
In the letter to investors in his Pershing Square holding company sent on Wednesday, Ackman said that “this is a moment when you can be very helpful to Pershing Square by participating in the PSUS offering and giving your order to the banks, the sooner the better”.
In an unusual move, Pershing Square USA said it “specifically disclaims” Ackman’s statement, in the filing which included the letter.
The fund has so far received orders from investors including Boston-based investment manager Baupost Group and the Teacher Retirement System of Texas. A family office with more than $65bn in assets, which Ackman did not name, had expressed interest in buying nearly 10 per cent of the ultimate deal, he said in the letter.
In addition to institutional investors, Ackman also emphasised the role that US retail investors would play in the flotation, adding that he anticipated them to be a “huge source of after-market demand”.
Pershing Square declined to comment.
Many hedge funds have struggled to raise capital in recent years, as investors have turned to a select group of multi-manager firms as well as alternative asset managers investing in infrastructure and private credit.
Ackman has become a prominent figure on platforms like X over the past year, garnering hundreds of thousands of social media followers as he criticised President Joe Biden and subsequently endorsed Republican presidential candidate Donald Trump.
In investor pitches this month, the billionaire has brought up his social media following as a potential benefit to the US fund’s shares once it had listed.
Ackman on Wednesday pressed investors to contact the banks leading the listing — a group that includes Citigroup, UBS, Bank of America and Jefferies — to place their orders.
“We would [be] grateful if you would participate in the PSUS IPO and indicate an order to the banks as soon as possible,” he said.
Pershing Square USA will be a closed-end fund listed on the New York Stock Exchange, investing in large, publicly traded stocks that Ackman and his team believe are undervalued.
Ackman had previously told investors that he expected the company to trade at a premium compared with the net assets it held. This may have been done to address potential investor concerns that the stock could trade at a persistent discount like his Amsterdam and London-listed vehicle, Pershing Square Holdings.
In Wednesday’s letter, Ackman said that investors had raised questions about a potential discount emerging.
“There is enormous sensitivity to the size of the transaction,” said Ackman in the letter.
“Particularly in light of the novelty of the structure and closed end funds’ very negative trading history, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognise that this closed end company will trade at a premium after the IPO when very few in history have done so.”
Ackman also said that investors had raised concern about key man risk, with the health of the investment company at risk if something were to happen to him as a key decision maker.