(Bloomberg) -- Billionaire hedge-fund manager Bill Ackman’s initial public offering for a closed-end fund is poised to raise far less than the $25 billion he floated two weeks ago.
The head of Pershing Square Capital Management expects the fund will file with US regulators to raise $2.5 billion to $4 billion, according to a filing Thursday. The ultimate deal size will depend on demand over the coming three business days, with the fund slated to price on Monday evening, though the firm has placed a cap of $10 billion on the sale.
While Pershing Square USA Ltd.’s IPO is now only expected to raise a fraction of the amount Ackman recently suggested, he sought to assure some investors in a letter that the scaled-back expectations would actually help with the sale.
“The $25 billion number in the media initially anchored investors in thinking the deal would be too large,” he wrote in a July 24 letter to investors that was included in the filing. “Ultimately, I expect this ‘anchoring’ to be helpful to the final outcome.”
Ackman said the sale has received a range of orders from a “diverse group of investors.”
Seth Klarman’s Baupost Group submitted an order for a $150 million position, while mutual fund company Putnam is in for $40 million, or more if the deal falls short of $10 billion, Ackman wrote. He said the Teachers Retirement System of Texas could also increase its $60 million order, depending on the size of the deal.
A representative for Baupost declined to comment. Spokespeople for Putnam and the Teachers Retirement System of Texas did not respond to requests for comment.
Ackman also said a family office with assets in excess of $65 billion — which he didn’t identify by name — expressed an interest in buying a 9.9% stake.
The US offering will mirror Pershing Square Holdings Ltd., Pershing’s European fund that is currently traded, Ackman has said.
Pershing Square, the management company that runs the closed-end funds and hedge funds, recently sold a 10% stake in the firm ahead of a potential IPO down the road. Ackman said earlier this month on a call that the management company’s IPO could come as soon as late 2025 or 2026.
In his letter, Ackman urged the firm’s existing investors to put in orders for the stock, saying it would be helpful to “improve the strength of tomorrow’s initial message to the market on deal size.”
“This is a moment when you can be very helpful to Pershing Square by participating in the PSUS offering and giving your order to the banks, the sooner the better,” it said. “Orders that come later are of course still very helpful as the book will build and we create momentum over the weekend into Monday.”
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