Top investor Ackman hunts mega deal, counts on big backers
Hedge fund veteran William Ackman has the support of some of Wall Street's top investors as he tries to pull off the biggest-ever deal carried out by a blank-cheque acquisition company, according to recent regulatory filings.
The heavy hitters rounded up by Ackman for his Pershing Square Tontine Holdings Ltd investment vehicleinclude mutual fund giant T. Rowe Price Group Inc, investment firm Guggenheim Partners, hedge fund Baupost Group, Canadian pension fund Ontario Teachers' Pension Plan and private equity firm Blackstone Group Inc.
Tontine raised US$4 billion in an IPO in July. It is the largest-ever special purpose acquisition company (SPAC) and will use the IPO proceeds, as well as debt and new equity it can raise, to acquire a minority stake in a company valued at tens of billions of dollars.
As is typical with SPACs, Tontine has not told its investors what specific company or type of company will be acquired. As possible targets, Ackman is eyeing family owned businesses, public firms that want to spin off big divisions and “mature unicorns,” developed and privately financed companies worth more than US$1 billion, a person familiar with the process said.
This is where deep-pocketed SPAC shareholders come in handy. Were Ackman to seek an investment that exceeded his SPAC's resources, the investors could boost its firepower by providing additional equity financing. Ackman's hedge fund has also committed to investing between US$1 billion and US$3 billion to any deal.
Tontine's IPO was heavily oversubscribed, allowing Ackman to hand-pick the investors and what stakes to allocate to them, according to people familiar with the process, who requested anonymity.
Tontine brings a “curated list of shareholders who are expected to be invested for many years,” Ackman told bankers working on the SPAC, according to a source. A spokesman for Ackman declined to comment.