Bill Ackman in a Bloomberg Television interview on November 1, 2017. Billionaire investor William Ackman, who raised $4 billion in the biggest special-purpose acquisition ever to date (SPAC), told investors that he would return the money after failing to find a suitable target for the company to go public through a merger.
Christopher Goodney | Bloomberg | beautiful pictures
Billionaire investor William Ackman, who raised $4 billion in the largest special purpose acquisition company ever (SPAC), tells investors he will return the money after failing to find a suitable target company to offer through merger.
The development has been a major setback for the prominent hedge fund manager, who originally planned for SPAC to buy shares in Universal Music Group last year when these investment vehicles were in vogue. popular on Wall Street.
In a letter to shareholders on Monday, Ackman highlighted many factors, including adverse market conditions and strong competition from initial public offerings (IPOs). tradition, thwarted his efforts to find a suitable company to merge with his SPAC.
“High-quality and profitable durable growth companies can often delay listing their shares until market conditions are more favorable, which limits the universe of deals.” high quality possible for PSTH, especially in the past 12 months,” Ackman said. code symbol for his SPAC.
In July 2020, Pershing Square Tontine raised $4 billion in an initial public offering and attracted prominent investors ranging from hedge fund Baupost Group, Canadian pension fund… Ontario members and mutual fund companies. T. Rowe Price Group.
SPACs, also known as vote counting companies, are publicly listed blocks of cash created by large investors – known as sponsors – with the sole purpose of merging with a company. private company. The process is similar to a reverse merger, taking the target company public.
SPAC peaked in 2020 and early 2021, generating hundreds of millions of dollars in paper profits for several prominent SPAC creators like Michael Klein and Chamath Palihapitiya.
Over the past year, however, companies merging with SPAC have underperformed, forcing investors to reject blank check deals. That coupled with tighter regulatory scrutiny and a stock market downturn has practically shut down the SPAC economy, with billions of dollars at stake.
Furthermore, the record performance of conventional IPOs in the United States in 2021 poses a competitive challenge for SPAC sponsors like Ackman, as a number of value-rich startups have chosen to list shares. their stock on exchanges through traditional routes.
“The rapid recovery of our capital markets and economy is good for the US but unfortunate for PSTH, as it makes the conventional IPO market a strong competitor and the preferred alternative. for high-quality businesses looking to list shares,” Ackman said.
In July last year, Ackman attempted to acquire a 10% stake in popular music, was removed by the French media group Vivendi, through his SPAC was derailed due to regulatory hurdles. The U.S. Securities and Exchange Commission opposed the deal, and Ackman instead put the investment in his hedge fund.
“While there were potentially actionable transactions for PSTH over the past year, none of them met our investment criteria,” Ackman said.
