Pershing Square Capital Management founder Bill Ackman said his new special-purpose acquisition company was "the most investor-friendly SPAC in the world."
"What is new in our structure is that it is the first SPAC where we do not receive any compensation: no administration fees, incentive fees … we do not buy cheap stocks. There is literally no compensation for sponsors," he told CNBC on Wednesday "Squawk Box".
The Pershing Square Tontine Holdings fund is poised to become the largest special purpose acquisition company [SPAC] to begin trading on Wednesday.
The fund was announced in June and should initially raise $ 3 billion in debt. In early July, however, the number was increased to $ 4 billion, with Pershing Square Capital investing another $ 1-3 billion, meaning the total value of the vehicle could reach $ 7 billion.
SPACs are also known as blank check companies because investors spend money without knowing when or what their capital is being used for. Due to the traditionally favorable conditions for sponsors and managers, they did not always have the best reputation.
As soon as the SPAC goes public, the goal is to acquire it or to merge it with a private company to bring it public. Investors then have the opportunity to become shareholders in the newly merged company.
"Our goal is to buy a minority stake in a company, and by that I mean that we are going to partner with someone. We will go public and our shareholders will own 20%, 25%, 30%. We believe that we can make a beneficial deal for our shareholders that really gives a company a great opportunity to accelerate its growth, relieve the balance sheet, and provide capital for investors looking to exit, "said Ackman.
"We think it's a great structure and a wonderful welcome," he added.
A regulatory filing for the fund said it will target four areas for its acquisition: mature unicorns, which are privately held companies with over $ 1 billion in value, family businesses, large private equity – Portfolio companies, as well as companies that would do so. Otherwise, go public through a traditional IPO. However, this could have disrupted the pandemic.
For the private company, SPACs are sometimes a less risky way to go public on an often accelerated timeline without having to go through all of the SEC's regulatory framework.
"I think it's actually a much better process," said Ackman of SPACs versus IPOs. "It is much better for the issuer and it is much better for the shareholder because he can make a thoughtful decision that is not accelerated by the typical IPO process."
In the midst of volatility and a weak IPO market, SPACs are becoming increasingly popular. So far, according to Dealogic, they have raised more than $ 12 billion this year, putting the deal flow on the right track to break the 2019 record $ 13.5 billion. Notable SPAC acquisitions in 2020 include Nikola and DraftKings, and Richard Branson's Virgin Galactic in 2019.
Pershing Square Tontine Holdings shares are listed on the New York Stock Exchange under the ticker PSTH.U.
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