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 Hilton, whose brands include such high-end names as Conrad and
Waldorf Astoria, priced its shares at $20, within the expected
range, and gave the world's largest hotel operator an equity value
of $19.7 billion. The stock will begin trading on the New York Stock
Exchange on Thursday under the ticker symbol "HLT."
Blackstone took Hilton private in 2007 for $26.7 billion, including
debt, at the height of the market. The financial crisis hit soon
after, leaving the company facing a large debt pile due to the
leveraged buyout and a recession that hit business. Blackstone
refinanced about $13 billion of the hotel chain's debt before
launching the IPO.
It also plans to use the proceeds from the offering to repay $1.25
billion in debt.
"Blackstone must be wiping their brow knowing that the company had a
label since they bought it at the top <of the market>," said David
Menlow, president of IPO research firm IPO Financial Network. "Even
with the markets changing the way they have, it's been a beneficial
outcome for them."
Blackstone has invested in total about $6.4 billion in Hilton, and
the 76.2 percent stake its funds will hold after the IPO would be
worth about $15 billion, meaning it is on course to make more than
2.3 times its money. This means that Hilton ranks as one of the most
successful private equity deals of its size.
Hilton and existing shareholders sold 117.6 million shares in the
IPO, the second-largest float this year behind oil pipeline holding
company Plains GP Holdings LP.
Hilton had initially offered 112.8 million shares at an expected
range of $18 to $21. But a source familiar with the IPO said the
float was oversubscribed by around 10 times, meaning investor demand
far outstripped supply.
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Hilton, which was founded in 1919 by Conrad Hilton, operates in 90
countries, has more than 4,000 hotels and 670,000 rooms under its
umbrella. The company itself owns or leases 157 hotels, including
the Waldorf Astoria in New York and the Hilton Hawaiian Village.
Hilton's IPO comes as the U.S. hotel industry has been recovering
along with the economy, with room rates and occupancy levels
expected to increase in 2014, according to PricewaterhouseCoopers.
The Dow Jones U.S. Hotels index has risen nearly 30 percent so far
this year. It also comes amid a surging IPO market, spurred by a
market rally and low interest rates.
Several private equity firms have taken advantage of favorable
markets to sell or list assets. Another Blackstone-backed hotel
company, Extended Stay America Inc <STAY.N>, raised about $565
million in November. Blackstone also plans an IPO of hotel chain La
Quinta, sources previously told Reuters. The investment firm also
listed Brixmor Property Group Inc <BRX.N> earlier this year.
Deutsche Bank AG <DBKGn.DE>, Goldman Sachs Group Inc <GS.N>, Bank of
America Corp <BAC.N> and Morgan Stanley <MS.N> led the Hilton
offering.
(Additional reporting by Greg
Roumeliotis in New York; editing by Gary Hill, Matthew Lewis, Leslie
Adler and Andrew Hay)
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