By Svea Herbst-Bayliss
(Reuters) -Billionaire investor Bill Ackman scrapped the launch of Pershing Square USA on Wednesday, days before the fund was set to begin trading on the New York Stock Exchange.
Ackman scaled back plans for an initial public offering just a day earlier for the second time in a week after seeing at least one prominent investor withdraw and face a new round of regulatory scrutiny.
On social media platform
“We will report back as soon as we are ready to launch a revised transaction,” he wrote.
A spokesperson for Ackman had no additional comment.
Hours later, Ackman posted again saying he “made the decision to withdraw the IPO (on Wednesday morning) when (he) came up with a better transaction structure.”
Closed-end funds have lost popularity because they often trade at a discount to the securities they hold. None were launched last year and only six were launched in 2022, industry data shows.
Ackman unveiled plans in February for a lower-cost fund that mimics his hedge fund’s investments for U.S.-based investors, including retail clients. People familiar with the matter said the fund could raise as much as $25 billion in assets, making it one of the biggest initial public offerings in years.
That would have more than doubled the $19 billion in assets overseen by Ackman’s New York-based Pershing Square Capital Management.
Potential investors raised concerns about the fund’s structure, where the new money would be invested at a time when the market was racing higher and who would make the investments.
Last week, Ackman told investors in his management company that the fund would be capped at $10 billion, and on Tuesday he said he expected to raise about $2 billion.
“While we have received tremendous investor interest in PSUS (Pershing Square USA), one key question remains: Would investors be better served by waiting to invest in the aftermarket rather than the IPO?” Ackman wrote in his first post on Wednesday.
Ackman has held dozens of meetings with top hedge funds and mutual funds in recent weeks and said there has been significant interest in the new vehicle. .
He acknowledged that Pershing Square USA’s structure raised concerns because such vehicles often trade at a discount or premium to assets held. He said his company has committed $500 million as an anchor investment in what he called a U.S.-listed investment holding company.
Last week, Ackman sent a letter to investors in his management company informing them of the listing process and asking them to raise money. He also mentioned committed investors, including Boston-based hedge fund Baupost Group.
Although the letter was intended to be private, it was submitted to regulators late last week and contributed to a delay in the expected start of trading.
Baupost, led by Seth Klarman and known for staying out of the headlines, decided not to participate and scare other potential investors, people familiar with the matter said.
