Billionaire investor Bill Ackman is taking his investment firm public, with Pershing Square Inc. planning to raise up to $1.66 billion by offering 33.12 million shares at an expected price of $50 per share.
"Over time, we have come to learn that the best businesses for investment have similar characteristics. They are simple, predictable, and free-cash-flow-generative," Ackman wrote in a recent letter to prospective shareholders, outlining his investment philosophy.
The offering is part of a complex dual-listing that also includes Pershing Square USA (PSUS), a closed-end fund. For every 100 PSUS shares purchased, investors will receive 20 shares of Pershing Square Inc. at no extra cost, according to a March filing. The combined offerings aim to raise between $5 billion and $10 billion.
This high-profile IPO will serve as a significant test of public market appetite for alternative asset managers, especially one so closely tied to a single high-profile investor. A successful launch would provide Pershing Square with a substantial permanent capital base for new investments and could influence valuations across the asset management sector.
The move to go public is designed to anchor the firm with permanent capital, preventing investors from redeeming funds and forcing asset sales at inopportune times. Ackman stated in a recent interview that after the closing, 98% of Pershing’s capital will be held in permanent vehicles. The specific timeline for the initial public offering has not yet been disclosed, pending regulatory approvals for listing on the New York Stock Exchange.
Ackman's strategy, as detailed in his letter, focuses on companies with "impenetrable 'moats' or large barriers to entry." This philosophy is reflected in Pershing's recent investments in large-cap technology and AI-related stocks, including Alphabet, Amazon, Meta Platforms, and Uber. The firm's new closed-end fund, PSUS, will concentrate on a portfolio of 12 to 15 of these large-cap growth stocks, charging a 2.28% total annual fee with no performance fee.
While Ackman has shown interest in ventures like SpaceX, proposing a merger with a special-purpose acquisition rights vehicle (SPARC) in late 2023, his core strategy appears to favor more mature, cash-flow-generative businesses. SpaceX, with its high capital expenditures in its launch and AI segments, does not currently fit the mold of an archetypal Ackman investment, despite the strong competitive moat of its Starlink division.
This article is for informational purposes only and does not constitute investment advice.
