Bill Ackman plans to raise around $ 4 billion by listing a new investment vehicle in London, in the latest example of a hedge fund manager looking for capital that cannot escape in a crisis.
The American activist, whose targets include Allergan and Air Products, hopes to follow in the footsteps of other hedge fund titans, including Daniel Loeb and Alan Howard, who have launched “closed funds” on the London Stock Exchange.
Unlike traditional hedge funds, where investors can claim their money at regular intervals, closed-end funds raise permanent capital. Shareholders who wish to cash out must sell their stake in the open market to other investors.
Adam Jeffery | CNBC
Mr Ackman dropped new clues to his plans on Wednesday in a letter to investors at his hedge fund, Pershing Square. He did not specify the size or location of the fundraiser, details of which may yet change.
âBecause we are an active, control and influence oriented investor, we have avoided being fully invested due to the risk of investor redemptions,â he said, expressing his frustration that the returns would have. could have been higher if he had not kept an average of 14%. of Pershing Square’s assets in cash.
Read morePotential loss of Ackman when presenting Herbalife
“We hope to start solving this problem with the initial public offering of Pershing Square Holdings Ltd, scheduled for later this year, which will increase the amount of permanent capital.”
More from the Financial Times:
Ackman bets $ 2.2 billion on Air Products stake
Ackman to reduce stake in Canadian Pacific
Ackman plans 2013 listing for $ 4 billion fund
Mr Ackman first spoke of a permanent fundraiser last year, but strong performance in recent months and investor enthusiasm for activist hedge funds has encouraged him to move forward with this. plan.
Activists, who take stakes in companies and campaign for strategic changes, describe themselves as long-term investors and are therefore particularly concerned with locking up capital in the long term to avoid having to exit positions prematurely.
Mr. Loeb raised funds for his hedge fund through the listing of Third Point Offshore Investors in London in 2007, the same year Mr. Howard’s hedge fund group Brevan Howard listed BH Macro.
Read moreI was not in the lead of Allergan’s actions, says Ackman
Other funds, including David Einhorn’s Greenlight Capital, have raised long-term capital in the reinsurance market. They have started companies that sell insurance premium income and investment with the underlying hedge fund.
In Wednesday’s letter, Mr. Ackman revealed his top funds have grown 25% so far this year, after fees, and he addressed one of his most controversial investments, a negative bet against Herbalife, the nutritional drink business that he claims to be a pyramid scheme. .
Last month he vowed to deliver a “death blow” to the company by presenting the results of a secret investigation into its marketing practices, but the stock has soared.
“While my overly promotional snapshot led to a PR failure and a complete stock price rebound that day, we were fortunate to have garnered a lot of attention,” he said. he writes. “Advertising and transparency are the enemies of a trust game.”
Herbalife says Mr. Ackman’s claims are not true.