Tuesday, 31 May 2016
Last updated 3 days ago
Jul 9 2013 | 12:35pm ET
Pershing Square Capital Management is seeking up to $1 billion for a new special-purpose vehicle that will invest in a single stock.
The New York-based hedge fund aims to raise the money over the next nine days. The SPV will invest alongside Pershing Square's existing hedge funds, which will invest up to $2 billion in the stock itself. Pershing Square aims to buy in excess of 5% of the stock and then launch an activist campaign to force changes.
An institutional investor has given Pershing Square an "indication of interest" to invest $200 million in the fund, it said.
The hedge fund did not identify the stock, saying only that it is a large-capitalization, investment-grade U.S. corporation that operates primarily in a single business. Pershing Square founder William Ackman wrote that its stock trades at a lower multiple than its closest competitor.
"The business is simple, predictable and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power," he wrote.
The new SPV is not the first time that Pershing Square has created a single-stock fund, but the firm certainly hopes it goes better than its previous attempt. A $2 billion Target Corp.-only fund raised in 2007 lost 90% of its value in just two years.
Pershing Square has launched four previous single-stock funds.
The new fund will charge a 0.25% management fee and a performance fee of between 5% and 15%.