Pershing Square Holdings (PSH) fund manager Bill Ackman has made a public pitch to Elon Musk to help the Tesla mogul float his SpaceX next year.
In a tweet on X, the social media platform owned by Musk, Ackman suggested his firm Pershing Square Capital Management could commit $4bn to the initial public offer (IPO) and do due diligence on the company on behalf of all shareholders.
Reports say the IPO could value the rocket company, which has cornered the market in satellite launches, at a stunning $1.5trn (£1.1trn), the same valuation as its Nasdaq-listed electric vehicle manufacturer Tesla.
Key to his proposal is using the acquisition company Pershing Square SPARC Holdings that Ackman launched two years ago with approval from the US Securities and Exchange Commission.
Through a merger with SPARC, SpaceX could achieve its listing without underwriting fees or transaction costs “other than modest legal fees which SPARC would pay from its cash on hand”, said Ackman.
He added that Musk could offer SPARC rights to long-standing Tesla shareholders who could either invest in the IPO or sell the rights to other investors.
Depending on what price SPARC was set at, SpaceX could raise between $42bn and $149bn including $4bn from Pershing Square Capital Management.
Ackman said his firm was ready start work immediately and announce the IPO in mid-February. “We could do due diligence and enter into a definitive agreement committing to the transaction within 45 days,” he said.
Musk did not respond on X. This morning shares in Pershing Square Holdings, Ackman’s £8.6bn London-listed investment company flagship, added 10p to £49.08.
Under an agreement signed in September 2023, Pershing Square funds, including PSH, committed to invest between $250m and $1bn if SPARC identified an acquisition target.
PSH has £11.6bn of net assets invested in 13 large cap stocks doing business in North America, such as Google-owner Alphabet, Hertz, Hilton, Uber and Universal Music Group. Its shares stand 25% below net asset value, which is an improvement on the 30% average discount of the past year. Despite trailing the underlying portfolio, the shares have outperformed the S&P 500 index over three and five years with 79% and 117% total returns. The US benchmark has made 70% and 100% over the same periods.
Last week the company agreed to provide up to $1bn (£750m) of financing for an insurance company acquisition by real estate holding Howard Hughes that is part of the fund manager’s ambition to build a “modern-day Berkshire Hathaway”.
If the SpaceX IPO succeeded in hitting $1.5trn, it would represent a further near doubling for the privately owned business whose valuation was recently hiked to $800bn from $400bn, last week boosting the stakes held by four Baillie Gifford investment trusts, including Scottish Mortgage (SMT).
