Wednesday, 4 May 2016
Last updated 9 min ago
Apr 19 2012 | 11:14am ET
Pershing Square Capital Management is set to launch the world's largest closed-end listed hedge fund vehicle.
The New York-based firm said it would hold an initial public offering for the listed feeder fund as soon as January, and that the permanent capital vehicle would hold at least $4 billion. That figure is at least $1 billion more than the $3 billion mooted last summer and four times as large as the original $1 billion planned.
Not all of the money raised in the IPO would necessarily be new: The $11 billion hedge fund is encouraging its current investors to move to the new vehicle, called Pershing Square Holdings, and is offering a performance fee discount—cutting that figure from 20% to 16%—to those who do, the Financial Times reports.
Pershing Square founder William Ackman plans a "town hall" in London with investors to discuss the plans, which were laid out in a letter to them last month.
"PSH will have at least $4 billion in assets post IPO," Ackman wrote. "That size will make it by far the largest closed-end hedge fund admitted to trading on a major exchange."
Ackman said the new vehicle would offer both permanent capital and easier liquidity for investors.
"We are launching PSH because the need to manage our capital base for investor liquidity is a rare example of when investor demands can conflict with the investment objectives of our funds," Ackman wrote. "Our goal is to increase the amount of our capital that is permanent…. With permanent capital, we can be more opportunistic during periods of market and investor distress."
Pershing Square has already setup PSH in Guernsey as a shell company to invest in Pershing Square's offshore hedge funds. While the floatation could come as soon as January, Pershing Square could wait up to four years, offering documents show.
The London Stock Exchange is the likely home for PSH, according to the FT. NYSE Euronext's Amsterdam bourse is also being considered.