What’s going on here?
Billionaire Bill Ackman sold a 10% slice of his Pershing Square
hedge
fund to a group of investment houses and family offices as he prepared the firm for a
stock
debut.
What does this mean?
That piece of the firm, which sold for $1.05 billion, puts Pershing’s overall value at over $10 billion – a pretty penny when you consider the fact that it manages just $16 billion. But what sets this hedge fund apart is that almost all its assets are “permanent capital” – in other words, it doesn’t allow for withdrawals. And because of that, Pershing’s annual fee income is a lot easier to predict. The stake sale sets the stage for the hedge fund to go public, with an initial public offering (IPO) likely to happen in 2025 or 2026.
Why should I care?
Zooming in: Big plans.
Pershing Square already has a publicly listed fund in London and Amsterdam, and now it’s looking to launch two in the US, aiming to raise a combined $30 billion. The bigger of the two – known as Pershing Square USA – is expected to attract
interest
from US retail investors. The move would nearly triple the fee-generating assets the firm manages. And that could, in turn, help to justify its curiously high valuation, smoothing the road to an IPO.
Source: Bloomberg
The bigger picture: Bucking trends.
Passive funds have been beating active funds – hands down – in recent years, providing better returns and at much lower fees. Mind you, Ackman’s Pershing Square has been an exception: it’s managed to produce high returns, even after its chunky fees. That performance, along with the firm’s strong name recognition and big social media presence, could bode well for its planned new suite of offerings.