Hilton Worldwide Holdings Inc. plans to raise as much as $2.4 billion in an IPO on the New York Stock Exchange. The Blackstone Group L.P. (NYSE:BX)-owned hotel chain and its existing shareholders will be selling 112.8 million shares. In a regulatory filing, Hilton said that it will price shares between $18 and $21 each. At the higher end of its price range, the hotel chain will be valued at about $32.5 billion including debt.
Hilton immensely profitable investment for Blackstone
Hilton will be selling 64.1 million shares, while the remaining 48.7 million shares will be offloaded by its existing shareholders, including an arm of Goldman Sachs Group Inc (NYSE:GS). The McLean, Virginia-based company said that it will use the proceeds of the sale to pay down $1.25 billion of its $11.8 billion debt. Hilton shares will trade under the ticker symbol “HLT.”
The Blackstone Group L.P. (NYSE:BX) acquired the hotel operator for $26.7 billion in 2007, including debt. The alternative investment firm poured in $6.4 billion of its own money and financed the remaining amount through debt. After the offering, Blackstone will own 750.6 million shares or 76.2% of Hilton’s equity. That would value Blackstone’s stake at around $14.6 billion, more than doubling its initial investment.
Hilton IPO bigger than Hyatt’s
The Blackstone Group L.P. (NYSE:BX) is taking Hilton public at a time when stock markets are near all-time highs, and hotel occupancies continue to improve. Low interest rates and a market rally have increased investor appetite for stocks. In the U.S., average revenue per available room has been increasing since 2010. It’s expected to growth 6% in 2014.
It’s clearly the biggest ever IPO in the hotel industry. Hyatt Hotels Corporation (NYSE:H) went public in November 2009 by raising $1.09 billion. But Hilton’s offering could go up to $2.7 billion if underwriters decide to exercise their rights to purchase 16.9 million shares.
Founded in 1919, Hilton has more than 4,000 hotels with 665,667 rooms in 90 countries, according to Tanya Agrawal of Reuters. For the fiscal year 2012, the company reported $352 million in net profits, up 39% YoY, on revenues of $9.3 billion.