Pershing Square Capital Management founder Bill Ackman said his new special purpose acquisition company was “the most investor-friendly SPAC in the world.”
“What is new in our structure is that this is the first SPAC where we do not take any compensation: no management fees, incentive fees… we do not buy cheap stocks. there is literally no compensation for the sponsors, ”he told CNBC on Wednesday. “Screaming box.”
The fund, called Pershing Square Tontine Holdings, is set to become the largest Special Purpose Acquisition Company, or SPAC, registered when it begins trading on Wednesday.
The fund was announced in June and was initially aimed at raising $ 3 billion in outside capital. But earlier in July, the number was raised to $ 4 billion, with Pershing Square Capital investing an additional $ 1 billion to $ 3 billion, meaning the vehicle’s total value could reach $ 7 billion.
SPACs are also known as blank check companies because investors shell out money without knowing when, or even why, their capital will be used. They have not always had the best reputation due to traditionally favorable conditions for sponsors and managers.
Once the PSPC becomes public, the objective is then for it to acquire or merge with a private company, thus making it public. Investors then have the option of becoming shareholders of the new merged company.
“Our goal is to buy a minority stake in a company, and what I mean by that is we’re going to merge with someone. We’re going to make them public and our shareholders will own 20%, 25%, 30% We believe we can strike a deal that is beneficial to our shareholders, truly providing a great opportunity for a company to accelerate its growth, deleverage its balance sheet and provide capital to investors looking to exit, ”Ackman said.
“We think it’s a great structure and a great welcome,” he added.
A regulatory brief for the fund has indicated it will target four areas for its acquisition: mature unicorns, which are private companies valued at over $ 1 billion, family businesses, large private equity holding companies. , as well as companies that otherwise go public via a traditional IPO, but this may have seen disruption thanks to the pandemic.
For the private company, PSPCs are sometimes a less risky way to go public within an often accelerated time frame, and without having to go through all the SEC regulatory hurdles.
“I think it’s actually a much better process,” Ackman said of PSPCs versus IPOs. “It’s much better for the issuer, and it’s much better for the shareholder because they can make a thoughtful decision that is not rushed by the typical IPO process.”
Amidst volatility and a lackluster IPO market, PSPCs are growing in popularity. So far this year, they’ve raised more than $ 12 billion, according to Dealogic, putting the dealflow on track to surpass the record total of $ 13.5 billion in 2019. Notable PSPC acquisitions in 2020 include Nikola and DraftKings, as well as Richard Branson’s Virgin Galactic in 2019.
Pershing Square Tontine Holdings shares will trade on the New York Stock Exchange under the symbol PSTH.U.
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