Bill Ackman Sells 10% Stake in Pershing Square, Plans IPO

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Bill Ackman to Sell 10% Stake in Pershing Square, Eyes IPO

Team FS

31/May/2024

Key Points:

Bill Ackman plans to sell a 10% stake in Pershing Square for $1.05 billion.
The funding round values Pershing Square at $10.5 billion.
Ackman aims for an IPO in the U.S., with no official process started yet.

Billionaire investor Bill Ackman is making significant moves with his investment firm, Pershing Square, as he prepares to sell a 10% stake, aiming to eventually take the company public. This decision marks a pivotal step for Ackman’s firm, known for its substantial assets and influential market presence.

Fundraising and Valuation

Ackman's firm is raising $1.05 billion in a funding round, which represents 10% of the management company and implies a valuation of $10.5 billion. According to a source familiar with the matter, the investors involved in this deal are primarily institutional and family offices who have chosen to remain anonymous. This significant funding effort indicates robust investor confidence in Pershing Square's future prospects.

IPO Ambitions

With the successful completion of this funding round, the hedge-fund manager is eyeing an eventual initial public offering (IPO) in the U.S. However, it is noteworthy that Ackman has not yet hired bankers or officially started the IPO process. This move reflects a strategic long-term vision to bring Pershing Square to the public markets, potentially broadening its investor base and enhancing its capital-raising capabilities.

Leadership and Management

Two years ago, Ackman appointed Ryan Israel as the chief investment officer, marking the first time he delegated day-to-day investment responsibilities to someone else. While Ackman retains his role as CEO and ultimate control over decision-making, he has publicly stated that Israel would be his successor in the event of any unforeseen circumstances. This leadership transition underscores the firm’s commitment to continuity and strategic planning.

Pershing Square’s Performance and Strategy

As of the end of April, Pershing Square managed $18.6 billion in total assets. Most of this capital is held within Pershing Square Holdings, a closed-end fund that trades on European stock exchanges. Ackman’s reputation as a leading hedge-fund investor has been cemented by years of market-topping returns and impactful activist campaigns.

Social Media Presence

Ackman has also garnered a significant following on social media platform X, amassing 1.2 million followers. He frequently comments on a range of issues, from antisemitism to presidential elections, leveraging his platform to influence public discourse and connect with a broader audience.

New Investment Initiatives

Earlier this year, Ackman unveiled plans to offer a new investment vehicle listed on the New York Stock Exchange. This move aims to leverage his widespread following among Main Street investors. The publicly traded closed-end fund will invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America. This initiative highlights Ackman's strategy to diversify his investment offerings and engage a broader investor base.

Portfolio and Recent Performance

At the end of March, Ackman’s hedge fund held six major stocks, including Alphabet, Chipotle Mexican Grill, and Hilton Hotels. The fund posted a notable 26.7% gain last year, reflecting its strong performance and strategic investments. In 2022, Ackman made headlines by quitting activist short selling, a practice that previously led to a high-profile battle against Herbalife.

Conclusion

Bill Ackman’s decision to sell a 10% stake in Pershing Square and the subsequent plans for an IPO mark a significant milestone for the firm. With robust fundraising, strategic leadership, and a focus on long-term growth, Pershing Square is well-positioned for its next phase of development. Investors and market observers will be closely watching Ackman’s moves as he continues to shape the future of his influential investment firm.

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