Ackman taps Deutsche Bank, UBS for hedge fund portfolio IPO: sources

LONDON/BOSTON Wed Sep 3, 2014 1:53pm EDT

William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks to the audience about Herbalife company  in New York, July 22, 2014.  REUTERS/Eduardo Munoz

William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks to the audience about Herbalife company in New York, July 22, 2014.

Credit: Reuters/Eduardo Munoz

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LONDON/BOSTON (Reuters) - Billionaire investor William Ackman has tapped Deutsche Bank (DBKGn.DE) and UBS (UBSN.VX) to handle the listing of one of his hedge fund portfolios in London later this year, three sources familiar with the matter said on Wednesday.

Ackman had told investors last month he would try to raise permanent capital for his New York-based hedge fund Pershing Square Capital Management's Pershing Square Holdings fund.

The sources said Ackman chose the two European banks for the job, and that the closed-end fund should be listed on the London Stock Exchange by the end of the year. They said the official road show for the IPO would likely kick off within a few weeks.

Deutsche Bank and UBS declined to comment. A spokeswoman for Ackman declined to comment.

Pershing Square Holdings has roughly $3 billion in assets - a fraction of the Pershing Square Capital Management's $15 billion. It gained 31.2 percent during the first eight months of 2014, according to an investor with the fund, making it one of the industry's best performing funds this year.

People familiar with the IPO process said Ackman could raise at least $1 billion in fresh capital amid strong demand for a piece of his firm. Ackman has previously said he would only plan for a public listing if it could break the $1 billion threshold.

The listing will subject the portfolio to new public disclosure requirements, shedding some light on a hedge fund industry known for closely guarding its investment strategies and performance details.

Ackman, however, has earned a reputation as one of the industry's most outspoken players. He often relies on public presentations and media attention to generate interest in his various campaigns.

He is currently trying to persuade Botox maker Allergan Inc. - in which Pershing Square Capital Management is the biggest investor - to sell itself to rival Valeant Pharmaceuticals.

And he has argued for nearly two years that regulators should shut down nutrition company Herbalife, in which his firm placed a $1 billion short bet, citing what he says is evidence of fraud.

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Ackman's returns have rebounded dramatically in 2014 from single-digit gains in 2013, due to losses on Herbalife and J.C. Penney. Despite the strong returns, some of Ackman's campaigns face an uphill battle and are prompting some investors to be concerned.

In July, Ackman promised to deliver a "death blow" to Herbalife, but his talk fell flat on Wall Street and briefly sent the company's stock price up.

Allergan, meanwhile, is fighting hard to prevent a sale to Valeant, robbing Ackman of some of the deal's initial sparkle.

In a letter to investors in August, Ackman said the new public listing could help the fund remain fully invested, instead of keeping cash in reserve.

He said the fund had to keep a substantial amount of the assets in cash to meet investor redemptions in 2009 when the fund surged 41 percent.

(Editing by Richard Valdmanis and Bernadette Baum)

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