Billionaire investor Bill Ackman’s Pershing Square Capital Management is setting the stage for an initial public offering of its new U.S.-based fund focused on retail investors, the Wall Street Journal reported today (May 31). With around 80 percent of his assets under management already tied up in a publicly traded closed-end fund in Europe, this marks another milestone in Ackman’s breaking from being a traditional hedge fund manager.
The new fund, called Pershing Square USA (PSUS), was announced in February via Ackman’s X account and a fund prospectus. Ackman’s dipping into U.S. retail investors could be him trying to take advantage of his growing media spotlight—the 58-year-old investor has 1.2 million followers on X and gained significant press for his $2.3 billion victory from betting on a 2020 market crash. The fund prospectus stated that Pershing Square’s “brand-name profile and broad retail following will drive substantial investor interest.”
Hedge fund IPOs are rare though not unusual; Man Group and Blue Owl are two known alternative asset managers that are publicly traded. Ackman’s PSUS IPO would likely be the largest and most prominent IPO of its kind in many years.
Ackman founded Pershing Square LP in 2004 as a traditional hedge fund, which took concentrated equity bets and charged close to an industry-standard “2 and 20” fee (2 percent management fee on assets under management and 20 percent on investment returns).
However, in 2014, Ackman introduced a new investment vehicle called Pershing Square Holdings (PSH), a closed-end fund based in Guernsey (an island in the English channel that has become a popular place of incorporation for high net-worth funds) and publicly traded in Amsterdam and London. Unlike traditional hedge funds, investors cannot simply pull their money out from a closed-end fund and the fund charges “1.6 and 16” rather than the traditional “2 and 20.”
PSH’s success has been less than ideal, though. This fund, which raised $3 billion in its 2014 IPO, has consistently traded at a discount to its net asset value, currently managing about $14.6 billion with a market value of approximately $9 billion. This means Pershing Square cannot raise more capital efficiently in the fund, as selling or issuing shares at a price lower than the net asset value would dilute shareholders.
As PSH holds around 80 percent of the assets Ackman manages, this is especially stressful for the company’s future. A 2024 presentation revealed, “In 2023, we thoroughly examined the options for a U.S. listing to increase the number of investors who can own PSH.” Essentially, Pershing Square’s leadership felt that, if U.S. retail investors could buy PSH shares, which they are currently not allowed to do, they would give the company a higher valuation.
PSUS is a reflection of that sentiment; it’s essentially a U.S. version of PSH. It begs the question of why Ackman sought to introduce PSH in European markets in the first place; Bloomberg’s finance columnist Matt Levine believes the answer is likely that the U.S. has stronger regulations on how publicly traded investment funds are allowed to use hedge fund strategies, such as leverage, derivatives and short-selling.
All in all, this would be Ackman’s third IPO. He previously launched Pershing Square Tontine Holdings, the largest-ever SPAC that went public in July 2020 with the intention to acquire privately-held businesses. It liquidated and shut down two years later.
With PSUS, Ackman is further solidifying himself as more of an asset manager, overseeing mostly publicly traded closed-end fund investments, than a typical hedge fund manager. Ackman has always been unique in his style: while traditional hedge funds, like Citadel or Millennium, have become renowned for making dozens of investments, quickly opening and closing out of positions, Ackman prefers to hold long-term activist positions on only a handful of companies.