Following in the footsteps of other private fund managers who have sought permanent capital through public offerings, activist investor Bill Ackman’s Pershing Square Holdings, Ltd. has raised about $2.7 billion through a recent offering of its shares on Euronext Amsterdam. Prior to the offering, the company converted into a closed-end investment vehicle; its shareholders will be able to achieve liquidity by selling their shares on that exchange. This article focuses on the novel approach to the company’s calculation of performance fees and on the tax treatment of the entity and its investors in Guernsey, where it is organized, and the Netherlands, where its shares now trade. For discussions of other fund managers who have gone to the public markets for permanent capital, see “Anatomy of a Blank Check IPO by a Hedge Fund Manager
,” Hedge Fund Law Report, Vol. 7, No. 13 (Apr. 4, 2014); and “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle
,” Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009). Other managers have used public offerings to monetize the value of their businesses, to provide capital for expansion and to create liquidity for founders and employees. See “Ares Management IPO Raises Permanent Capital and Creates Liquidity for Founders’ Interests
,” Hedge Fund Law Report, Vol. 7, No. 14 (Apr. 11, 2014); and “Mechanics of a Hedge Fund Manager IPO
,” Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012).