Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC
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Bill Ackman’s Pershing Square Tontine Holdings is poised to become the largest special purpose acquisition company, or SPAC, on record when it begins trading on Wednesday.
The fund, announced in June, targeted $4 billion in outside capital, which was higher than the initial target of $3 billion. Ackman’s hedge fund, Pershing Square Capital, will invest an additional $1 billion to $3 billion, meaning the vehicle’s total value could reach $7 billion.
Shares will trade on the New York Stock Exchange, under the ticker PSTH.U.
Ackman said Wednesday on CNBC’s “Squawk Box” that his new investment vehicle is the “most investor friendly SPAC in the world.”
“What’s new in our structure is that we’re taking no compensation: no management fees, incentive fees … we’re not buying cheap stock. There’s literally no compensation to the sponsors,” he said.
SPACs are also known as blank-check companies, since investors fork over money without knowing when, or even what for, their capital will be used. Once the SPAC goes public, the goal is then for it to acquire or merge with a private company, thereby taking it public. Investors then have the option to become shareholders in the newly combined company.
For the private company, it’s a less risky way to go public on an often accelerated timeline, and without having to jump through all of the SEC’s regulatory hoops.
Amid volatility and a lackluster IPO market, SPACs are growing in popularity.
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