Bill Ackman cuts fundraising target by up to 90% for US fund IPO

Bill Ackman’s fundraising target for his US investment fund Pershing Square USA has been slashed by up to 90 percent, falling well short of his initial target of 25bn.

In a letter to the Securities and Exchange Commission, the billionaire hedge fund manager stated that he anticipated raising between $2.5bn and $400bn. However, the total amount could reach $10bn depending on the marketing efforts in the next few days.

Ackman wrote to investors of his Pershing Square company on Wednesday that they can “be very helpful to Pershing Square” by taking part in the PSUS offer and by giving their order to the banks as soon as possible.

Pershing Square USA, in an unusual move, said that it “specifically denies” Ackman’s statement. This was included in the filing containing the letter.

Investors have so far placed orders with the fund, including Boston’s Baupost Group as well as Texas’ Teacher Retirement System. Ackman said that a family office with assets of more than $65,050m, which he did not identify, expressed an interest in purchasing nearly 10% of the final deal.

Ackman, in addition to institutional investors and US retail investors, also highlighted the role they would play in the flotation. He added that he expected them to be “a huge source of after-market demands”.

Pershing Square has declined to comment.

In recent years, many hedge funds have had difficulty raising capital. Investors have instead turned to multi-manager firms and alternative asset managers who invest in infrastructure or private credit.

Ackman became a prominent figure in the last year on platforms such as X, gaining hundreds of thousands social media followers. He criticised President Joe Biden before endorsing Republican presidential candidate Donald Trump.

In investor pitches, this month the billionaire brought up his social-media following as a possible benefit for the US fund’s share price once it was listed.

Ackman urged investors on Wednesday to contact the leading banks — Citigroup, UBS Bank of America, Jefferies and Bank of America — to place orders.

He said: “We’d be grateful if you participated in the PSUS public offering and indicated an order to the bank as soon as possible.”

Pershing Square USA is a closed-end mutual fund that will be listed on the New York Stock Exchange. It will invest in large publicly traded stocks, which Ackman believes are undervalued.

Ackman told investors in the past that he anticipated the company would trade at a higher price than its net assets. It is possible that Ackman did this to allay investor fears about the stock trading at a discount, similar to his Amsterdam and London listed vehicle Pershing Square Holdings.

Ackman stated in his letter of Wednesday that investors raised concerns about the possibility of a discount.

Ackman wrote in his letter that “there is an enormous amount of sensitivity regarding the size” of the transaction.

Investors must have a lot of faith, and use careful analysis and judgement to recognize that this closed-end company will trade higher after its IPO. This is something very few companies in history have ever done.

Ackman said investors were concerned about the key man risk. The health of an investment company could be at risk if he, as a key decision-maker, was to die.