Bill Ackman to Sell 10% Stake in Pershing Square, Aiming for Public Offering

Billionaire investor Bill Ackman is selling a 10% stake in his investment firm, Pershing Square, with the eventual goal of taking the firm public. Ackman’s firm is raising $1.05 billion in a funding round, representing 10% of the management company and implying a valuation of $10.5 billion, according to a source familiar with the matter. The investors involved are institutional and family offices who prefer to remain anonymous, the source said.

Background and Strategic Moves

The Wall Street Journal first reported on these developments, while Pershing Square declined to comment. Despite the funding round, the hedge-fund manager has not yet hired bankers or formally begun the process of an initial public offering (IPO) in the U.S.

Two years ago, Ackman appointed Ryan Israel as chief investment officer, marking the first time he designated someone else to handle the day-to-day investing operations at the firm. Ackman continues to serve as CEO with ultimate decision-making authority, although he has indicated that Israel would succeed him if necessary.

Pershing Square’s Growth and Future Plans

As of the end of April, Pershing Square managed $18.6 billion in total assets. Most of its capital is held in Pershing Square Holdings, a closed-end fund that trades on European stock exchanges. Ackman’s reputation as one of the world’s leading hedge-fund investors has been bolstered by years of market-topping returns and vocal activist campaigns.

Ackman has also amassed a significant following on social media platform X, with 1.2 million followers. His posts cover a wide range of topics, from antisemitism to the presidential election.

Earlier this year, Ackman unveiled plans to offer a new investment vehicle listed on the New York Stock Exchange. This move aims to leverage his popularity among retail investors. The publicly traded closed-end fund will invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America.

Investment Portfolio and Performance

At the end of March, Pershing Square’s hedge fund held only six stocks, including prominent companies such as Alphabet, Chipotle Mexican Grill, and Hilton Hotels. The fund posted a 26.7% gain last year, underscoring Ackman’s ability to generate significant returns for investors.

Implications and Market Impact

The sale of a 10% stake and the potential IPO are significant steps for Pershing Square. These moves could provide the firm with additional capital and greater visibility in the investment community. For Ackman, taking Pershing Square public represents a milestone in his illustrious career, further solidifying his status as a leading figure in the hedge fund industry.

Institutional and family office investors’ interest in the funding round suggests strong confidence in Pershing Square’s future prospects. The firm’s strategic investments and Ackman’s leadership are likely to continue attracting significant attention from both retail and institutional investors.

Comparison with Industry Peers

The move to go public places Pershing Square in line with other high-profile hedge funds that have taken similar steps, reflecting a trend of increased transparency and access to capital in the industry. The firm's solid performance and strategic positioning may set a benchmark for other hedge funds considering public offerings.

Conclusion

Bill Ackman’s decision to sell a 10% stake in Pershing Square and the eventual plan to take the firm public mark significant developments in the hedge fund industry. With a valuation of $10.5 billion and substantial assets under management, Pershing Square is poised for continued growth and success. As Ackman prepares for an IPO, the firm’s strategic moves and robust performance will be closely watched by investors and industry analysts alike.

The successful execution of these plans could further enhance Pershing Square’s market position, attract new investors, and provide additional resources for pursuing high-value investment opportunities. The industry will be keenly observing how Ackman navigates this transition and the impact it will have on the broader hedge fund landscape.