Bill Ackman’s Berkshire Hathaway fever dream | USAEMALL.com

One thing to start: Goldman Sachs has said it will build a new unit to expand its financing operations, as the bank looks to combat mounting competition from private credit funds and better position itself to lend to the alternative investment behemoths that now dominate Wall Street.

In today’s newsletter:

• Bill Ackman dreams of his own Berkshire

• Will big companies go public in London?

• The $15bn deal making waves in San Francisco

Bill Ackman’s plan to become baby Buffett

Bill Ackman has a lot of balls in the air.

A few years ago he invented Pershing Square SPARC Holdings, a listed “special purpose acquisition rights” company aimed at eventually taking a large prominent company such as Elon Musk’s X or SpaceX public.

Ackman also wants to take his hedge fund Pershing Square public and last year attempted to raise a $25bn fund in the US.

Now the billionaire investor is taking his dreams a step further, stating on Monday that he plans to recreate his own Berkshire Hathaway from a hodgepodge of real estate assets that have languished on public markets for a decade.

On Monday, Ackman unveiled a more than $1bn deal for Pershing Square to take control of Howard Hughes Holdings, a real estate developer he created in 2012 from the carcass of mall operator General Growth Properties.

Under his control, Ackman aims to turn Howard Hughes into an acquisition vehicle that uses its cash flows and balance sheet to buy other public and private companies.

Ackman said the gambit was part of his efforts to build a “modern-day Berkshire Hathaway”.

The billionaire investor has always dreamt big and promised epic returns from his financial alchemy.

A decade ago, he fixated on “platform companies”, where an acquisitive chief executive could conjure blistering returns from flipping companies. Unfortunately, during that obsession he bet billions on Valeant Pharmaceuticals. But instead of a 45x return, Pershing Square lost billions.

Now an ascendant keyboard warrior on X and vocal backer of president-elect Donald Trump, Ackman is aiming to seize the moment by transforming Pershing Square into a large financial group with the capacity to compete with powerful private equity buyers on large takeovers, starting with his takeover of Howard Hughes.

Afterwards, he aims to revive his US fundraise, which was pulled last year after raising less than 10 per cent of the $25bn Ackman targeted, and eventually will take his firm public.

It all sounds exciting on paper, but Ackman has a history of coming up short.

Can Howard Hughes really generate much cash? It hasn’t for its decade-long history. It’s even unclear if Howard Hughes shareholders will accept Ackman’s $85-per-share purchase price.

In a presentation on Monday, Ackman pointed to Pershing Square’s “long-term track record in raising equity capital from institutional and retail investors”, and mentioned a record-sized $4bn acquisition vehicle he raised in 2020.

Left unsaid was that the vehicle was unwound two years later due to regulatory complications — just another in a long line of Ackman dreams left unfulfilled.

The hunt for British IPOs

Ask any IPO banker with a pulse, and they’ll tell you their pipeline of upcoming deals is looking strong.

That pipeline is much needed. Last year was a particularly dismal one in London, with the fewest listings in 15 years. UK bankers are hoping this year will bring a turn of fortunes, with a market that roars back to life.

There’s a queue of companies that could indeed list in London, with each one even more important to reviving the overall market, the FT reports.

The most anticipated deal will be that of online fast-fashion group Shein, which could pursue a mega-listing in London this year at about a £50bn valuation.

The company, founded in China and headquartered in Singapore, filed confidential papers last year for a proposed float and is still waiting for regulatory nods in the UK and China.

London is also vying to host Unilever’s €15bn ice cream division, although the company has not yet confirmed where it will list the business.

After that, the size of companies looking to go public in the UK as soon as this year rapidly drops off — and they all have a much lower profile than Shein or Unilever’s spin-off. (They’re certainly not household names.)

The cohort includes fintechs such as the Santander-backed payments company Ebury, financial services businesses such as the private equity-owned small business lender Shawbrook, and industrials groups such as Greece-based Metlen Energy & Metals.

While hopes are low, at least it looks like the market is on the up. Last year new companies listing in London raised just £737mn.

Jefferies snags a $15bn deal mandate

Johnson & Johnson’s $14.6bn deal for neuroscience drug developer Intra-Cellular Therapies brought a sigh of relief among industry watchers on Monday, as thousands descended on San Francisco for JPMorgan Chase’s annual healthcare dealmaking conference.

Finally, the years-long dearth of $10bn+ deals in the sector had ended.

The real talk among attendees, however, was the unlikely investment banker who clinched the deal on behalf of Jefferies — all under the nose of conference host JPMorgan.

The pugnacious investment bank Jefferies, best known for catering to smaller clients, has sought to leapfrog through Wall Street’s ranking of top dealmakers by hiring hundreds of managing directors.

Chief executive Rich Handler and president Brian Friedman have been on a hiring spree amid a dealmaking lull just as bulge bracket competitors such as Goldman Sachs and Morgan Stanley slashed their ranks.

One of their hires was Phil Ross, a 25-year veteran of JPMorgan. Ross, best known for cultivating relationships with young healthcare clients such as the obscure neuroscience developer Intra-Cellular, joined as chair.

In a huge win for Jefferies, Ross brought his decades-long client along with him.

After going public at a $500mn market capitalisation a decade ago, the drug developer grew precipitously thanks to a successful rollout of Caplyta, a drug used to treat bipolar disorder.

When it was revealed on Monday during JPMorgan’s own seminal conference that the bank had let its longtime client slip through its grasp, it became clear that Jefferies’ bet had paid off.

J&J’s nearly $15bn buyout of Intra-Cellular is the largest deal in the sector since Pfizer’s $43bn takeover of Seagen, and marks the largest acquisition by J&J since its $30bn buyout of rare drugmaker Actelion in 2017. In total, $18.5bn worth of deals were announced in the sector on Monday.

Ross’s first-ever deal for the bank — inked within his first five months — is set to deliver Jefferies millions in fees and boosts the probability that the boutique shoots up in the dealmaking ranks.

Job moves

• Authentic Brands has hired Matt Maddox as president. He most recently worked as chief executive at Wynn Resorts. 

• Sodali & Co, the global advisory firm owned by TPG, has named Andrew Benett as chief executive, a source tells DD. He previously worked at Havas Creative Group and Bloomberg Media.

• Janus Henderson has hired Kelly Cavagnaro as head of North America institutional coverage, where she’ll focus on expanding the firm’s presence in North America. She previously worked at Columbia Threadneedle.

Smart reads

Insurance crisis Experts have warned that homeowner insurance in California could easily collapse, the New Yorker writes. Will the devastating wildfires in Los Angeles set off its demise?

Chief exodus A number of chief financial officers are heading out the door, Lex writes. But it’s all part of the rough and tumble of corporate life — and need not scare off investors.

King of the world After aiding Donald Trump in the US presidential election, the world’s richest man is shifting his attention to Europe, The Atlantic writes.

News round-up

Goldman Sachs to deepen exposure to booming private credit industry (FT)

Cleveland-Cliffs and Nucor plan joint bid for US Steel (FT)

Big US banks set for $31bn quarterly profit as Wall Street business booms (FT)

Asset managers turn to defensive positioning as equity prices soar (FT)

US LNG group Venture Global seeks $110bn valuation in IPO (FT)

Estimated cost of Thames Water renationalisation questioned (FT)

Debts on EY’s failed Project Everest took longer than expected to clear (FT)

US and EU companies paid $3.5bn in Russian tax on profits in 2023 (FT)