Ackman’s Pershing Square Pulls Plug on IPO

Bill Ackman’s Pershing Square Capital Management has abruptly called off the initial public offering (IPO) of its new US-based closed-end investment management fund, just one day after filing with the SEC for a $2 billion listing – a significant reduction from its original target valuation of $25 billion.

The withdrawal comes after reports of regulatory scrutiny from the US Securities and Exchange Commission (SEC), which was expected to request more information on the closed-end fund before accepting the IPO price. The New York Times reported on Monday that the SEC was investigating a letter to shareholders sent by Pershing Square last week.

In a statement released on Tuesday, Ackman noted that while there was “enormous investor interest” in Pershing Square USA, he and his team questioned whether investors would be “better served waiting to invest in the aftermarket than in the IPO.” Ackman continued: “This question has inspired us to reevaluate PSUS’s structure to make the IPO investment decision a straightforward one.”

The letter revealed the firm’s issues, including lowering expectations for the IPO size from a potential $25 billion to a range of $2.5 billion to $4 billion. Ackman also announced considerable investor interest, citing committments from hedge fund Baupost Group, mutual fund manager Putnam, and the Teachers Retirement System of Texas.

The fund had planned to offer 40 million shares at $50 each. However, Ackman eventually opted to abandon the IPO plan, saying: “We will report back once we are ready to launch a revised transaction.”