Bill Ackman, Pershing Square Capital Management CEO, speaking at the Delivering Alpha conference in NYC on Sept. 28th, 2023.
Adam Jeffery | CNBC
Billionaire investor Bill Ackman announced on Friday that his unique special purpose acquisition company (SPAC) structure has been approved by U.S. regulators. This approval allows him to pursue potential deals.
Ackman’s SPAC, known as Pershing Square Tontine Holdings, offers investors a tradable right to participate in a future deal, and this approval brings it closer to becoming a reality. The Securities and Exchange Commission has given the green light to what Ackman refers to as a Special Purpose Acquisition Rights Company (SPARC). Under this structure, Ackman will inform investors about potential acquisitions before they pledge funds.
In a post on X (formerly known as Twitter), Ackman said, “If your large private growth company wants to go public without the risks and expenses of a typical IPO, with Pershing Square as your anchor shareholder, please call me. We promise a quick yes or no.”
Many have criticized the traditional SPAC structure for its inefficiency and high costs to shareholders. SPACs are shell corporations listed on a stock exchange with the purpose of acquiring a private company and taking it public within two years. However, in Ackman’s SPARC, investors have the option to participate in the deal or walk away.
The SPARC will soon distribute special purpose acquisition rights at no cost to former securityholders of Pershing Square Tontine. Ackman, who raised $4 billion in the largest-ever SPAC, returned the funds to investors after failing to find a suitable target company for a public offering.
Following a period of enthusiasm during the pandemic, SPAC investors have become wary of speculative high-growth equities with unproven track records, as many of these companies have failed to meet inflated forecasts. As interest rates stabilize, the market, including IPOs, has shown signs of a rebound.
Pershing Square has announced that the SPARC will immediately begin pursuing a merger with private, high-quality growth companies. The company is targeting firms seeking to raise a minimum of $1.5 billion in capital.
Ackman’s Pershing Square funds could invest a minimum of $250 million and up to $3.5 billion as anchor investors in any potential transaction, according to the company.
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