July 25 (Reuters) - Bill Ackman said his new U.S. listed

fund, Pershing Square USA, will be dramatically smaller than the

$25 billion people initially said he could raise, citing

investors' general nervousness about the structure and how to

invest the cash.

Ackman told investors this week there will be a "hard cap on

size at $10 billion" and that he expects to raise between $2.5

billion and $4 billion.

"There is enormous sensitivity to the size of the

transaction," the hedge fund manager wrote in a letter to his

investors that was made public in a regulatory filing on

Thursday. "The ultimate deal size will depend on how demand

builds Thursday, Friday and Monday," he wrote.

Earlier this year, Pershing Square USA, which is expected to

start trading on the New York Stock Exchange next week under the

symbol PSUS, was said to be on track to become one of the

biggest public listings ever and possibly more than double the

size of his firm's assets.

Now the billionaire investor, who oversees $19 billion in

assets at his New York-headquartered firm Pershing Square

Capital Management, is prepared to take in far less new capital.

But he is urging investors to commit while there is still time.

"We believe that the most important factor for creating

long-term value for Pershing Square Inc. is not the size of the

PSUS IPO, but how it trades in the market," Ackman wrote.

"Today would be ideal," he told investors about when to send

cash, noting he would be "grateful" if they would participate in

the fundraising where his firm already committed $500 million.

Investors have grown wary of closed-end funds which are

traded on exchanges but do not issue or redeem new shares and

can trade at a premium or discount to the securities they hold.

Last year no new closed-end funds were launched after only six

were launched in 2022, Investment Company Institute data show.

Ackman is calling Pershing Square USA a U.S.-listed

investment holding company but acknowledged that closed-end

funds' negative trading history requires investors to make a

"leap of faith". Additionally potential investors also had

questions for him about how fast the new cash can be put to work

and who would do the investing.

The fund manager countered that he and chief investment

officer Ryan Israel have an experienced team and many good

companies are now trading at attractive lower levels even at a

time the broader market was marching higher. Universal Music

Group, a big holding for Ackman, for example tumbled nearly 24%

on Thursday.

Ackman is marketing to institutional investors and retail

investors alike, relying on his fame on social media platform X

to get the word out about him and his investments. Mutual fund

complex Putnam and pension fund Teachers Retirement System of

Texas have already committed to Pershing Square USA, he wrote.