Bill Ackman Postpones Pershing Square IPO After Slashing Expectations

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Bill Ackman has postponed the initial public offering of his US investment fund Pershing Square USA, days after he admitted it would raise far less money than initially planned and appealed to investors to back the deal.

The postponement represents a stunning setback for the billionaire hedge fund manager, one of the most prominent figures in the investment world, who had previously expected to raise $25 billion in what would have been one of the largest initial public offerings in history. It appears to be related to comments made in an investor letter earlier this week that went beyond the scope of information provided to regulators in the fund’s IPO filing, potentially violating regulations governing investor communications.

The letter pointed to potential trading activity in the shares after the IPO, as well as a growing order book for the deal. The banks leading the listing, a group that includes Citigroup Inc., UBS, Bank of America Corp. and Jefferies, are waiting to see if they raise any red flags with U.S. securities regulators, two people involved in the deal said.

A third person cited a “problem” with the document, referring to the message. The people added that they expected the delay to take several days, but the company still plans to go public.

Pershing Square issued a statement late Friday saying it was “moving forward with its IPO” and would announce pricing at a later date. A company representative declined further comment in response to specific questions about the letter or potential regulatory issues.

Citi and Bank of America declined to comment. UBS and Jefferies didn’t immediately respond.

“We believe that the most important factor in creating long-term value for Pershing Square Inc. is not the size of the PSUS IPO, but how it trades in the market,” Ackman wrote in the letter. “Thus, this transaction is about a successful IPO on day one and a successful trade at a premium thereafter.”

“We believe that U.S. retail will be a huge source of demand after the market closes,” he added.

The SEC places restrictions on how companies can market themselves before they list in an effort to protect potential investors. Companies are also generally wary of providing forward-looking guidance that could expose them to liability.

The New York Stock Exchange posted a brief message on its website saying the IPO had been postponed, without adding further details.

Pershing Square USA, which plans to list under the ticker symbol PSUS, denied Ackman’s comments in a regulatory filing that included the letter on Thursday.

Ackman had revised the target size of the IPO from $25 billion in previous weeks to between $2.5 billion and $4 billion, according to the letter sent to investors in Pershing Square Holdings.

“This is the moment when you can be very helpful to Pershing Square by participating in the PSUS offering and submitting your application to the banks, and the sooner the better,” he said in the letter.

He also revealed that potential investors have expressed skepticism that PSUS shares are trading at a premium to its net assets under management, a crucial point in Ackman’s marketing campaign in recent weeks.

The company had planned to price its listing on Monday, and the shares were supposed to begin trading on the big board the next day. The closed-end fund plans to invest in large companies that Ackman and his team believe are undervalued and have competitive advantages.

Additional reporting by James Fontanella-Khan, Amelia Pollard and Arash Masoudi