Ackman's Pershing Square raising $1 billion, eyeing IPO, source says
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 31 2024
0mins
Should l Buy OWL?
Source: reuters
Bill Ackman's Hedge Fund Funding and IPO Plans:
- Pershing Square Capital Management, led by billionaire Bill Ackman, is finalizing a $1 billion funding round with institutional investors and family offices.
- The firm, with $16.3 billion in assets, is being valued at $10.5 billion by investors.
- A new investment portfolio, Pershing Square USA, will be launched with roughly $500 million from the funding round.
- The fund will offer lower fees and quicker access to capital, potentially attracting Ackman's social media followers.
- An IPO for Pershing Square could happen in 2022 or 2026.
Comparison with Other Investment Firms:
- Ackman's business structure is likened to Ares Management Corp and Blue Owl Capital, which have significant assets and market capitalizations.
- Ackman's Pershing Square returned 26.7% last year, outperforming the broader stock market.
Market Context:
- Man Group, another listed investment firm, has $175.7 billion under management and a market capitalization of around $4 billion.
- Ackman did not respond to requests for comments on the funding and IPO plans.
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Analyst Views on OWL
Wall Street analysts forecast OWL stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for OWL is 21.13 USD with a low forecast of 18.00 USD and a high forecast of 28.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
12 Buy
3 Hold
0 Sell
Strong Buy
Current: 11.630
Low
18.00
Averages
21.13
High
28.00
Current: 11.630
Low
18.00
Averages
21.13
High
28.00
About OWL
Blue Owl Capital Inc. is an alternative asset management company. The Company deploys private capital across Credit, GP Strategic Capital and Real Estate platforms on behalf of institutional and private wealth clients. Its product platforms include Credit, GP Strategic Capital and Real Estate. Its credit products offer private financing solutions primarily to upper-middle-market companies. Its credit products are offered through a mix of business development companies, long-dated private funds, managed accounts and collateralized loan obligations. It is focused on acquiring equity stakes in or providing debt financing to private capital firms. Its Real Estate products are focused on acquiring triple net lease real estate occupied by investment-grade or creditworthy tenants. Its Real Estate products are offered through Permanent Capital vehicles, including its real estate investment trusts, and long-dated private funds. It offers asset management services to the insurance industry.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Rising Default Risks: UBS Group has warned that in an aggressive disruption scenario, default rates in U.S. private credit could rise to 13%, significantly higher than the projected stress for leveraged loans and high-yield bonds, estimated at 8% and 4%, respectively.
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See More
Private Credit Markets Face AI Disruption Risks
- Increased Pressure on Software Sector: The introduction of new AI tools by Anthropic has triggered a sell-off in software data provider shares, intensifying uncertainty in the private credit market, particularly regarding lending risks to software companies.
- Decline in Asset Management Stocks: Ares Management fell over 12%, Blue Owl Capital dropped more than 8%, and KKR and TPG saw declines of nearly 10% and 7%, respectively, reflecting investor concerns about AI's potential impact on cash flows and default risks.
- Rising Default Risks: UBS Group has warned that in an aggressive disruption scenario, default rates in U.S. private credit could rise to 13%, significantly higher than the projected stress for leveraged loans and high-yield bonds, estimated at 8% and 4%, respectively.
- Liquidity Issues Intensified: Although strains in private credit predate AI concerns, Jeffrey C. Hooke noted that existing liquidity and loan extension issues have been exacerbated by recent developments, adding new challenges to an already pressured sector.
See More
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- Market Capitalization Loss: The software sector's selloff has wiped out nearly $1 trillion in market capitalization, leading the Dow Jones US Asset Managers Index to decline nearly 5% this week, reflecting investor concerns over loan and leverage exposure.
- Declining Private Equity Deal Volumes: Morgan Stanley noted that technology services deal volumes account for nearly 21% of overall private equity activity, with TPG, Carlyle, and KKR slightly above this level, indicating weakened market confidence in software-related investments.
- Rising Loan Risks: Software borrowers are shouldering an average debt-to-EBITDA ratio of 7.4 times, significantly higher than the 5.9 times average across a $1 trillion loan pool studied by KBRA, highlighting the private credit market's heavy reliance on the software sector and its associated risks.
- Portfolio Review: Companies like Ares and KKR are reviewing their portfolios to assess the impact of AI on their software investments, demonstrating a cautious approach among asset managers in the face of market volatility.
See More
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- Private Credit Sector: The emergence of private credit "cockroaches" indicates a shift in the market, particularly affecting the software sector.
- Investment Opportunities: This situation may present new investment opportunities in shares of business development companies that hold the debt of these affected companies.
See More
The Impact of Software Concerns on BDC Stocks: Reasons Some May Be Good Investment Opportunities
- Private Credit Sector: The private credit sector is facing challenges, likened to "cockroaches" emerging from the software industry.
- Opportunities in Business Development Companies: This situation may present investment opportunities in business development companies that hold the debt of affected firms.
See More
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- Target Price Adjustment: Blue Owl Capital has reduced its target price for Oppenheimer from $27 to $24.
- Market Impact: This adjustment may influence investor sentiment and trading strategies related to Oppenheimer's stock.
See More
Blue Owl Capital Sees No Red Flags in AI Software Disruption
- Strong Software Loan Performance: Co-CEO Marc Lipschultz stated that Blue Owl's software loan book remains robust without any performance declines, with loans averaging 30% of enterprise value and possessing 'huge' equity cushions, indicating the firm's resilience in the tech sector.
- Asset Management Growth: Blue Owl's assets under management (AUM) increased by 22% to $307 billion as of December 31, 2024, primarily driven by new capital commitments and the acquisition of IPI, showcasing the company's strong market appeal.
- Significant Capital Commitments: The firm raised $17 billion in new capital commitments in the recent quarter, totaling $56 billion for the year, reflecting Blue Owl's success in attracting investors and enhancing its financial position.
- Challenges in Private Credit: Despite strong growth, CFO Alan Kirshenbaum noted that the firm is behind its Investor Day goals due to headwinds in private credit, indicating the complexities of the current market environment.
See More
