Bill Ackman’s Pershing Square USA Slashes IPO Target to $2 Billion Ahead of NYSE Debut

Bill Ackman, the head of Pershing Square Capital Management, announced on Tuesday that his new listed investment vehicle, Pershing Square USA (PSUS), is targeting a capital raise of approximately $2 billion. This marks a dramatic reduction from the initial $25 billion goal that Ackman had originally envisioned, according to a report by Reuters.

In an official statement, Pershing Square USA outlined plans to sell up to 40 million shares, each priced at $50, with the public offering scheduled to begin on 6 August on the New York Stock Exchange. Institutional investors have until Friday to express their interest, while retail investors were given until 24 July to submit their applications.

A group of investment banks, including Citigroup Global Markets, UBS Securities, BofA Securities, and Jefferies, have been granted a 45-day option to purchase an additional 6 million shares at the same price. If fully exercised, this option could raise an extra $300 million for the fund. Ackman’s hedge fund, Pershing Square Capital Management, has already committed $500 million to the new US-listed investment company.

The strategy for PSUS involves acquiring positions in 12 to 15 large-cap, investment-grade companies that generate strong free cash flow and are undervalued. Ackman has already identified two such companies for potential investments and has expressed his intention to use the social media platform X (formerly Twitter) more frequently to provide updates on the fund’s activities.

Despite the significant reduction in its fundraising target, Ackman remains optimistic about the prospects of PSUS. The fund aims to generate attractive returns by focusing on large, undervalued companies in North America, particularly those with strong financial fundamentals. This approach is a departure from Pershing Square’s previous strategies, which often focused on activist investing.

Ackman’s commitment of $500 million signals confidence in the vehicle, while the involvement of prominent investment banks provides a sense of credibility and market support. However, the much smaller target compared to the initial ambition raises questions about investor appetite and the current market environment, which has been marked by increased volatility.

With the IPO fast approaching, all eyes will be on how the market reacts to Pershing Square USA’s debut and whether Ackman can regain momentum in a more challenging fundraising environment.