Hedge fund manager William Ackman moved one step closer to getting permanent capital for his Pershing Square funds when more than 120 investors committed to convert $2.2 billion of their investments into stakes in Pershing Square Holdings when it goes public. "Our principal goal in launching Pershing Square Holdings, Ltd was to convert existing capital to an eventual permanent form," Ackman wrote in a letter to investors. "We are off to a good start," he added.
Ackman currently oversees roughly $11 billion in assets and is well-known for his activist strategies including his most recent efforts to get consumer products company Procter & Gamble to shape up. He has long been planning a London-listed vehicle with a market value of several billion dollars, giving him more freedom in making long-term investments.
"With more stable capital, we can increase the proportion of our capital in the core active investment strategy which has historically generated much higher returns than our passive holdings," Ackman wrote.
But to reach the goal, more work lies ahead, Ackman acknowledged. "In order to meet the minimum public offering condition which we established for PSH, we need to grow the private PSH fund through capital appreciation and/or new capital additions to a minimum of $3 billion," he said. The deadline for investors to say if they wanted to convert was Nov. 16. Ackman said he is considering offering a second chance to convert for existing Pershing Square offshore investors on July 1, 2013 "to accommodate those investors who could not meet the November 16 deadline."
Through Nov. 17, the firm's flagship fund was up about 2 percent, year-to-date. The Pershing Square funds have returned 15 percent per year on average since Ackman launched them in 2004.