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 said Friday that U.S. regulators have approved his unique special purpose acquisition company structure, and he’s ready to hunt for a deal.
Investors in Ackman’s unfruitful SPAC, known as Pershing Square Tontine Holdings, got a tradable right to participate in a future deal, and now it’s closer to becoming a reality. The Securities and Exchange Commission greenlit what the Pershing Square CEO has called a SPARC — a special purpose acquisition rights company — in which he will inform investors of the potential acquisition before they pledge funds.
“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,” Ackman said in a post on X, formerly known as Twitter. “We promise a quick yes or no.”
Many have said the traditional SPAC structure can be inefficient and costly to shareholders. SPACs are shell corporations listed on a stock exchange with the purpose of acquiring a private company and taking the company public, typically within two years. In Ackman’s SPARC, investors get to opt in if they like the deal and walk away if they don’t.
The SPARC will shortly be distributing special purpose acquisition rights at no cost to former securityholders of Pershing Square Tontine. Ackman had raised $4 billion in the biggest-ever SPAC, but he returned the sum to investors after failing to find a suitable target company to take public.
After a hot period in the pandemic, SPAC investors have turned their backs on speculative high-growth equities with unproven track records after many of these firms failed to meet inflated forecasts. As interest rates stabilize, the market, as well as IPOs, have showed signs of rebound.
Pershing Square said the SPARC will immediately begin to pursue a merger with private, high-quality, growth companies. It is targeting companies who seek to raise a minimum of $1.5 billion of capital, the company said.
Ackman’s Pershing Square funds could commit a minimum of $250 million and up to $3.5 billion as anchor investors in the potential transaction, the company said.