By Utkarsh Shetti
April 29 (Reuters) - Bill Ackman's Pershing Square and his closed-end fund are set to list on the New York Stock Exchange on Wednesday, in a much-anticipated debut that will give investors
exposure to the billionaire activist's storied hedge fund.
The IPO crystallizes Ackman's long-cherished ambition of a flagship fund listed in New York and marks his second attempt to list Pershing Square USA, after he pulled the initial launch just days before its 2024 debut due to lower-than-expected investor demand.
He sweetened the deal this time by bundling in shares of the asset manager, while opting to charge only a management fee and forgoing the performance cut that hedge funds typically levy.
Ackman, who has built his Wall Street reputation on blockbuster activist wins at firms such as Canadian Pacific and Chipotle, is one of Wall Street's most closely watched investors.
The offering raised $5 billion, drawing capital from family offices, pension funds, insurers and high-net worth investors, who sought to tap into Ackman's investing acumen.
The listing comes just as the IPO market finds its footing after heightened volatility driven by the Iran war and investor caution towards AI-exposed software companies.
While choppy markets often deter companies from pressing ahead with listings, Ackman has pitched the fund as a way to capitalize on the disruption and invest in undervalued assets.
IPO A TEST FOR CLOSED-END FUNDS
The listing is set to test investor appetite for closed-end funds at a time of waning popularity, as they often trade at a discount to the assets they hold.
Closed-end funds are investment vehicles that raise cash from investors to buy up assets. They cannot be redeemed and only change hands on the secondary market after allocation, leaving them vulnerable to sharp swings that can push prices adrift from their net asset value.
"I would expect decent demand, but the structure with shares of the managing company as a sweetener suggests that the closed-end fund alone may not be enough to secure the desired level of investor interest," IPOX Research Associate Lukas Muehlbauer told Reuters.
Ackman has said a successful launch of Pershing Square USA, which will mimic his hedge fund's strategy to invest in 12 to 15 large-cap North American-listed companies, could set the stage for more such investment vehicles from Pershing Square.
Pershing Square USA is set to start trading on the NYSE under the ticker "PSUS", while the hedge fund Pershing Square will list under "PS".
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Arun Koyyur)
