Bill Ackman’s planned initial public offering for a US closed-end fund is expected to bring in $2 billion, less than 1/10th the target the billionaire hedge-fund manager suggested the sale could raise earlier this month.
Pershing Square USA Ltd.’s IPO is expected to price on August 5 after the close, according to a term sheet seen by Bloomberg News. Pricing is contingent on the US Securities and Exchange Commission declaring effective an IPO registration statement. The fund would debut on the New York Stock Exchange the next day.
That regulatory approval was expected earlier this month, and Pershing Square USA’s IPO, which was slated to price Monday, according to an earlier term sheet seen by Bloomberg, was subsequently delayed.
The regulatory hiccup came after Pershing Square USA filed an SEC update that featured a letter Ackman wrote to investors saying the firm was scaling back the expected proceeds from the deal to between $2.5 billion and $4 billion — a sharp dropoff from a target of $25 billion the billionaire floated to prospective investors earlier in July. The $2 billion target is also well short of a $10 billion cap the firm had in place on the sale.
The diminished pricing was the latest blow to the process that just Monday saw Seth Klarman’s Baupost Group decide against investing in the fund, according to a Bloomberg News report. Ackman had named the hedge fund as one of the potential backers in last week’s letter to investors. He wrote that Baupost would invest $150 million in the IPO.
The IPO is currently oversubscribed and Pershing Square is expected to host another investor town hall on Wednesday, according to a person familiar. The firm expects an aggregate offering of 40 million shares priced at $50 each, the filing shows.
A roster of more than 25 banks are working on the deal, led by global coordinators and bookrunners Citigroup, UBS Investment Bank, BofA Securities and Jefferies. Wells Fargo Securities, RBC Capital Markets, BTG Pactual, Barclays and Deutsche Bank Securities are acting as bookrunners for the IPO.
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