For a manager, one of the big appeals of running a hedge fund is that clients can’t move money in and out as easily as with a mutual fund, so you only have to worry about how outflows will affect your strategy during certain windows. But with hedge funds and activist investing both on the upswing, Pershing Square Capital Management founder Bill Ackman wants even more freedom. A possible London IPO for Pershing Square Holdings (the $2.6 billion offshore fund) would reportedly raise as much as $3 billion in capital, giving Ackman a war chest that’s not susceptible to withdraws from nervous clients.
Ackman would list at $4 billion market cap
Ackman was reportedly in London in late April, trying to build support among European investors for the IPO reports Alexandra Stevenson for DealBook. Pershing Square hasn’t made a public statement about the possible IPO, but people who have seen offering document told Stevenson that Ackman would initially raise between $1 billion and $3 billion and that he would list the offshore fund on the London Stock Exchange as soon as he had raised $4 billion.
The timetable and location can still change, and there’s no guarantee that the IPO will actually happen. Ackman discussed the possibility of taking a fund public a few years ago and never pulled the trigger, so if he doesn’t find enough support among institutional investors this place could also quietly go by the wayside.
A public hedge fund would give exposure to activist investing without losing liquidity
If Bill Ackman goes through with the IPO, it would make it possible for all kinds of investors to include his brand of activism in their portfolios (investing directly with Pershing is simply not possible for most people). It would also combine the advantages of putting your money in the hands of a successful hedge fund manager with the liquidity of equities and no fees. Even for institutional investors that could become a Pershing Square, buying shares of Pershing Square could be a better deal than locking up money for the long haul in some instances.
For Pershing Square, going public while the market is going strong and hedge funds are having strong inflows also makes sense because he could for once benefit when investors get nervous. If a public Pershing Square saw its stock price start to drop in the face of a crisis, buying back shares at a discount and recapitalizing later would be a silver lining in an otherwise difficult time.