Bill Ackman’s “blank cheque” company is looking to raise as much as $6.5bn in a share sale, ranking it as one of the largest buyout vehicles of its kind.
Pershing Square Tontine Holdings, as the special purpose acquisition vehicle, or Spac, is known, plans to raise up to $3.5bn in an initial public offering on the New York Stock Exchange, according to a regulatory filing.
Mr Ackman’s hedge fund, Pershing Square, acting as a sponsor of the Spac, would provide it with an additional $1bn to $3bn, buying shares at market value in a rare move that indicates Mr Ackman’s faith in the enterprise.
Typically, sponsors in such deals are given the opportunity to buy 20 per cent of the shares at an agreed price that tends to be significantly lower.
The blank cheque company is aiming to seize opportunities created by the coronavirus pandemic — anything from start-ups to private equity-backed companies or family-owned businesses in need of capital.
Blank cheque companies have become an increasingly popular tool to raise capital, with a record $13.4bn in proceeds last year, according to Dealogic. Mr Ackman joins a large cohort of investors who have raised funds on public markets as Wall Street embraces backdoor listings.
Last year, a Spac led by former Facebook executive Chamath Palihapitiya merged with Virgin Galactic, injecting $800m into Richard Branson’s space travel group and launching the company on to the public markets. Mr Palihapitiya launched a new Spac in April that raised $720m.
Daniel Loeb, the billionaire founder of hedge fund Third Point, executed a $2.6bn deal for the Silver Lake-backed payment provider Global Blue through his Spac, Far Point Acquisition Corp. That deal has come under pressure due to the pandemic’s impact on the Swiss company.
The PSTH offering is led by Citigroup, Jefferies and UBS. The co-managers on the deal are all minority-run companies that will receive 20 per cent of $86m in underwriting fees.
Mr Ackman made headlines earlier this year after Pershing Square made $2.6bn on a bet that companies would struggle to pay their debts. The billionaire investor used the profits from the trade to buy shares in big US companies that lost value when the impact of Covid-19 sent stocks lower.