Bill Ackman's Warren Buffett-Inspired Strategy Hits A Snag? Pershing Square USA Delays IPO Indefinitely After Slashing Target By 90%

The much-anticipated initial public offering (IPO) of billionaire investor Bill Ackman‘s Pershing Square closed-end fund has been postponed, as confirmed by the New York Stock Exchange (NYSE.)

What Happened: On Friday, the NYSE announced on its website that the listing of Pershing Square USA Ltd. has been delayed, with a new date yet to be disclosed.

Pershing Square refrained from commenting further but issued a statement clarifying that the IPO is still proceeding, with the pricing date to be announced later.

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The delay comes amid Ackman’s concerns about the size of the transaction and the novelty of the structure. He expressed these concerns in a July 24 letter to investors, emphasizing the need for careful analysis and judgment from investors.

The fund is expected to invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America. The public listing is seen as a move to leverage Ackman’s following among Main Street investors.

Why It Matters: The IPO delay follows a significant reduction in the fund’s target, which was slashed by as much as 90% from the initial $25 billion. In a letter to investors in his Pershing Square holding company sent on Wednesday, Ackman urged, "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." However, Pershing Square USA "specifically disclaims" Ackman's statement in the filing that included the letter.

Inspired by Warren Buffett‘s career, Ackman decided to take his funds public. He planned to use his social media presence and a Buffett-like annual meeting to bolster his new investment fund.

Pershing Square USA is a closed-end fund set to be listed on the New York Stock Exchange, investing in large, publicly traded stocks that Ackman and his team believe are undervalued. Ackman had previously informed investors that he expected the company to trade at a premium compared to the net assets it held.

Despite the reduction in the IPO target, Ackman remains optimistic about the fund's potential, particularly with the involvement of U.S. retail investors and the support of institutional investors.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Image via Harvard Association for Law and Business/ Tracy Tolf