Hilton Worldwide Holdings, owned by The Blackstone Group L.P. (NYSE:BX), filed for an IPO to raise at least $1.25 billion. The most closely watched IPO could value Hilton at about $30 billion, after going public.
Largest IPO For A Lodging Company
The Blackstone Group L.P. (NYSE:BX) took control of the world’s largest hotel chain in 2007 for over $18 billion. Besides that, The Blackstone Group also assumed $7 billion in debt, making it one of the hotel industry’s largest-ever debt-fueled takeovers.
The private-equity owner looks to take advantage of the rebounding commercial real estate market by floating the IPO.
At $1.25 billion, the IPO is set to be the largest for a lodging company. The hotel chain’s origin dates back to 1919, and today the company offers lodging under brands including Waldorf Astoria, DoubleTree, Homewood Suites and Hampton Inn.
Spurring Stock Gains For Hoteliers
In its filing with the Securities and Exchange Commission, Hilton did not disclose the actual amount it was looking to raise, nor how it intended to price shares. However, David Gelles of Dealbook feels The Blackstone Group L.P. (NYSE:BX) doesn’t intend to lose control of the hotel chain by issuing too many shares. He feels the private equity firm will continue to own a majority of the voting shares.
Lodging companies have seen increased revenue as evidenced in share price increase in other hoteliers such as Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) and Marriott International Inc (NYSE:MAR).
These listed hotel chains are trading about 12 times earnings before interest, taxes, depreciation and amortization.
During the last six years, The Blackstone Group L.P. (NYSE:BX) has managed to turn Hilton around, making it a dominant force in the global hotel market. During 2012, its revenue stood at $9.3 billion, up by 15 percent from 2010.
As disclosed in its Securities and Exchange Commission filing, Hilton has increased the number of open rooms in its system by 34 percent to 170,000.
With assiduously following the franchisee model by licensing its Hilton brand, the company is now responsible for 18 percent of global rooms under construction.
Interestingly, the properties under franchise are more profitable than the hotels owned and operated by Hilton itself.
Enthused by a broad rally in the stock market, over 124 IPOs were floated in the U.S. this year, the largest since 2007, according to a Bloomberg data.
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB), Goldman Sachs Group Inc (NYSE:GS), Bank of America Merrill Lynch and Morgan Stanley (NYSE:MS) are the main underwriters for the Hilton IPO.
