There had been rumors that Bill Ackman wanted to take Pershing Square public, but the activist investor did not confirm those plans until today, when he specifically addressed an IPO in a letter to investors.
In the letter, which was first obtained by Bloomberg, Ackman says an initial public offering is planned for the closed-end fund Pershing Square Holdings for later in the year. Ackman said tapping public markets should help Pershing Square avoid the need to keep large portions of its assets in cash in case a large amount of investors seek redemptions. (ValueWalk has posted a full copy of the letter.)
“Because we are an active, control and influence-oriented investor, we have avoided being fully invested because of the risk of investor redemptions,” Ackman writes in the letter. “We will hopefully begin to address this issue with the initial public offering of Pershing Square Holdings, Ltd., targeted for later this year, which will increase the amount of our capital that is permanent.”
After gaining 0.6% in July, Pershing Square Holdings is reportedly up more than 27% on the year.
Last year, it was reported that Ackman was looking to raise roughly $4 billion with a publicly traded fund that would be listed on the London Stock Exchange. Unlike some other hedge funds – such as Blackstone and Oak Tree Capital – Ackman isn’t taking his investment management firm public, but will instead raise public money through the closed-end fund, which would still give him the flexibility to pursue his activist interests while also allowing investors to access their funds.
Ackman has made headlines recently for teaming up with Canadian pharmaceutical company Valeant in an effort to buy Botox-maker Allergan, in which Pershing Square holds a 9.7% stake. Ackman said in his letter to investors on Wednesday that he remains committed to pushing for a deal. Valeant has so far seen its advances rebuffed, while Allergan has filed a lawsuit claiming Ackman joining forces with Valeant is illegal and the Federal Trade Commission is investigating the bid.
The Pershing Square founder has accused Allergan’s board of directors of breaching their fiduciary duty by not taking a harder look at Valeant’s offer and his letter calls out the company’s management for its “sandbagging approach to running a business.”