Markets

Bill Ackman's new blank check company may be a $4 billion bet on a so-called Mature Unicorn

Key Points
  • Billionaire investor Bill Ackman disclosed plans for an initial public offering of a blank check company, looking to raise $3 billion.
  • The new investment vehicle named Pershing Square Tontine Holdings plans to offer 150 million shares at $20 apiece, according to a Securities and Exchange Commission filing. 
  • Ackman's hedge fund, Pershing Square Capital, will invest a minimum of $1 billion in the blank check company, while having the option to bring the total value to $6.45 billion, the filing said.
  • It will target "Mature Unicorns," the filing said, referring to those more developed privately financed companies valued at more than $1 billion. It may also target, high-quality IPO candidates, private equity portfolio companies and family owned companies.
Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC

Billionaire investor Bill Ackman, who made a killing this year by nailing the market bottom, on Monday disclosed plans for an initial public offering of a $4 billion blank check company, which may target so-called "Mature Unicorns."

The new investment vehicle named Pershing Square Tontine Holdings plans to offer 150 million shares at $20 apiece, according to a Securities and Exchange Commission filing. 

Ackman's hedge fund, Pershing Square Capital, will invest a minimum of $1 billion in the blank check company, while having the option to bring the total value to $6.45 billion, the filing said.

Blank check companies are usually formed to raise funds through an IPO to finance a merger or acquisition, typically within two years. Ackman's new company will target "Mature Unicorns," the filing said, referring to those more developed privately financed companies valued at more than $1 billion. Ackman's new company likely will target one of those rare companies.

"Over the past decade, numerous high-quality, venture-backed businesses have achieved significant scale, market share, competitive dominance and cash flow — we call these companies 'Mature Unicorns,'" the filing said.

In addition to mature unicorns, the blank check company may also target, high-quality IPO candidates, private equity portfolio companies and family owned companies, according to the filing. "We also believe that the economic and market dislocation resulting from the COVID-19 pandemic has created market conditions and a resulting set of investment opportunities in four principal areas that we intend to pursue," the company said.

Ackman believes the economic and market disruption resulting from the coronavirus pandemic has created a favorable opportunity for his firm.

"The recent dislocations in both the stock market and private growth equity markets, combined with a number of high-profile private investment failures and disappointing IPO outcomes, have substantially reduced the amount of private funding available for these companies, while demands for liquidity from their investors have increased," it said.

The company expects the stock to begin trading on the New York Stock Exchange on the 52nd day following the filing. Citigroup, Jefferies and UBS Investment Bank are the joint book-running managers.

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Ackman turned heads on Wall Street this year by pocketing $2.6 billion in bets against markets in March. His hedge fund managed $10.7 billion of assets as of June 9.

The activist investor went on CNBC in mid-March to warn investors that "hell is coming" and urge the White House to shut down the country for a month. He revealed his firm exited the short positions on March 23, right when the S&P 500 bottomed.

His dire comments later sparked controversy as many argued that his fund would profit from further market declines. Ackman called the accusations "absurd." 

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