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In mid-June, Bill Ackman asked Wall Street for $1 billion to hunt down a major investment. Six weeks later, the street gave him $4 billion. The 54-year-old hedge fund manager disclosed Wednesday morning that he has raised the whopping sum to launch the largest-ever special purpose acquisition company, or SPAC, a public offering meant to …
In mid-June, Bill Ackman asked Wall Street for $1 billion to hunt down a major investment. Six weeks later, the street gave him $4 billion.
The 54-year-old hedge fund manager disclosed Wednesday morning that he has raised the whopping sum to launch the largest-ever special purpose acquisition company, or SPAC, a public offering meant to raise money for an acquisition or merger.
Ackman has made it clear that his SPAC, Pershing Square Tontine Holdings, will buy a big, privately-owned company within the next two years, invest billions and then take it public. His hedge fund Pershing Square Capital has stated that it will invest between $1 billion and $3 billion in addition to what is raised from outside investors.
That amounts to a war chest as big as $7 billion as the SPAC targets a minority position in what could possibly be a “mature unicorn,” according to IPO filings. As reported by The Post, targets could include Bloomberg LP, Airbnb and DirecTV.
In an interview on CNBC Wednesday morning, Ackman cited WeWork as an example of why the current IPO process is flawed in ways that SPACs can use to their advantage. After releasing an IPO prospectus that was criticized and then openly mocked, WeWork was forced by SEC rules to stay quiet and not defend itself publicly, leading to the cancellation of that offering and the near-destruction of the company, Ackman said.
By evaluating targets for investors that have given him capital for that purpose, Ackman said, he can streamline the proceeding and then simply list the company public using the SPAC’s ticker symbol.
“I think it’s actually much better process,” Ackman claimed. “It’s much better for the issuer, and for the shareholder because they get to make a thoughtful decision that’s not rushed by the typical IPO process.”
Ackman also claimed that his SPAC is “The most investor-friendly SPAC ever” because Pershing Square is not taking fees or profits from the offering and shareholders are allowed to pull their investment with interest if they disagree with the company Ackman chooses.
The $4 billion figure is also something of a personal victory for Ackman, who has gone from being on the brink of career disaster in 2016 to a record-setting capital raise.
