The move will enable the fund, established in 2012, to raise permanent capital, opening the doors for bigger investments by reducing investor redemptions.
The IPO will offer shares at $25 each. $13bn firm PSCM, which manages but remains separate from PSH, is set to invest $100m. The $2bn investments would add to the $1.5bn already secured from 30 cornerstone investors – including European pension funds, private bank clients and other US hedge funds – making the fund’s market capitalisation a minimum of $5bn.
Pershing Square Holdings has seen a successful year with returns in excess of 30 percent for its investors
The announcement fulfils expectations set out earlier in the year. In August Ackman sent a letter to investors confirming rumours of a future IPO. “Because we are an active, control and influence-oriented investor, we have avoided being fully invested because of the risk of investor redemptions”, he wrote. “We will hopefully begin to address this issue with the initial public offering of Pershing Square Holdings, Ltd.”
Pershing Square Holdings has seen a successful year with returns in excess of 30 percent for its investors. Ackman hopes to increase that further by raising public money through a closed-end fund and following similar recent moves by other key hedge fund players such as Alan Howard and Daniel Loeb. He said in a statement: “We expect that the public listing of PSH will substantially enhance the stability of our capital base enabling us to invest a greater percentage of our assets in activist commitments on a long‐term basis, and improving our ability to take advantage of market dislocations when they arise”.
Earlier in the year Ackman joined forces with Canadian pharmaceutical firm Valeant in a bid to purchase Botox-maker Allergan for $53bn, adding to its current 9.7 percent stake in the company, but its efforts have so far proved unsuccessful.
