Prominent billionaire hedge fund manager, Bill Ackman, has drastically scaled back the initial public offering (IPO) target for his U.S. investment fund, Pershing Square USA, by as much as 90%, according to the Financial Times. The initial goal of raising $25 billion has been significantly reduced after Ackman filed a letter with the Securities and Exchange Commission (SEC), stating his anticipation of raising between $2.5 billion and $4 billion, with the potential to increase to $10 billion through marketing efforts.

In an attempt to rally investors, Ackman had sent a letter to investors in his Pershing Square holding company, urging them to participate in the PSUS offering by giving their orders to the banks. However, Pershing Square USA explicitly disavowed Ackman's statement in the filing that included the letter.

Despite this setback, the fund has already secured orders from investors such as the Baupost Group, the Teacher Retirement System of Texas, and a family office with over $65 billion in assets. Ackman believes that U.S. retail investors will also play a significant role, predicting them to be a "huge source of after-market demand."

The decision to reduce the IPO target comes at a time when Ackman has been in the spotlight for various reasons, including his use of social media for attracting potential investors, his support for former President Donald Trump, and his public admiration for Warren Buffett, whom he considers his "unofficial mentor."

This adjustment in the IPO target also reflects the broader challenges faced by hedge funds in raising capital in recent years. Investors have shown a preference for a select group of multi-manager firms and alternative asset managers focused on infrastructure and private credit.

Pershing Square USA is a closed-end fund that is set to be listed on the New York Stock Exchange. It primarily invests in large, publicly traded stocks that Ackman and his team consider to be undervalued. Despite the reduction in the IPO target, Ackman remains optimistic about the fund's potential, especially with the involvement of U.S. retail investors and the support of institutional investors.

Ultimately, the revised IPO target for Pershing Square USA indicates a shift in strategy as Ackman navigates the challenging landscape of capital raising, while still aiming to generate strong returns for investors in undervalued stocks.