Pershing Square is raising about $1.05 billion in a funding round that values Bill Ackman's hedge fund at about $10.5 billion, a person familiar with the situation confirmed to Fortune.
The round is closing imminently. It’s unclear who Pershing's investors are, but they are acquiring a 10% stake in the hedge fund, the source said.
Half of the $1.05 billion in proceeds will go to Pershing Square USA, a closed-end fund that’s expected to go public later this summer, the person said. The fund aims to invest in a portfolio similar to what the hedge fund targets. Pershing Square USA plans to invest in 12 to 20 large-cap companies that are investment grade and generate free cash flow, according to a regulatory filing.
The rest of the new funds will anchor investments in funds that Ackman plans to launch later, according to the Wall Street Journal, which first reported the round.
Ackman, Pershing Square’s CEO, founded the fund in 2004. The fund started out as an activist investor and was known for bruising battles with companies, including Herbalife in the 2010s. (Ackman himself engaged in a long and public feud with billionaire Carl Icahn, who took a stake in Herbalife.)
In 2022, Pershing Square switched gears, opting for a quieter approach that called for working with management behind the scenes, Reuters reported. (The hedge fund hasn’t run a proxy campaign since 2017.) Pershing Square currently seeks to take large minority stakes in companies that are undervalued. In the first quarter, Pershing’s portfolio included Chipotle, Hilton Worldwide Holdings, Alphabet, and Universal Music Group, according to the fund’s 2023 annual report.
Pershing Square Holdings, according to the same report, generated a five-year average annualized return of 31.2%, nearly double the 15.7% produced by the S&P 500 over the same time period.
Pershing Square managed about $16.3 billion in net assets at the end of April. The hedge fund does plan to go public, but that likely won’t happen until the end of 2025 at the earliest, the person familiar told Fortune.
More recently, Ackman has gained notoriety for attacks on diversity, equity, and inclusion, or DEI, initiatives at top institutions, including his alma mater, Harvard University, where the billionaire led a high-profile campaign against Claudine Gay, who resigned as president earlier this year.
