Hilton aims to raise $1.25bn in IPO

Hilton Worldwide hopes to sell $1.25bn worth of shares in a US IPO as it returns to the public market.
The Hilton Abu Dhabi hotel on Corniche Road. Silvia Razgova / The National
The Hilton Abu Dhabi hotel on Corniche Road. Silvia Razgova / The National
Hilton Worldwide is looking to sell $1.25 billion worth of shares in a US initial public offering, as the hotel operator plans a return to the public market after years under private-equity ownership.

The company, whose shareholder is Blackstone Group, plans to use the proceeds of the public share-sale to pay down debt and general corporate purposes, it said in a filing to the US financial market regulator.

Blackstone Group took Hilton private in 2007 after it acquired the hotel operator for more than $26bn, which included debt.

Since then the company has expanded rapidly, including in the Arabian Gulf. It plans to deliver about 20,000 new rooms across the Middle East and Africa over the next two years - effectively doubling the size of its regional operations.

Blackstone is planning to cash out with the aim of making a hefty return amid a rebounding commercial property market. Hilton has 4,041 hotels, resorts and timeshare properties. Its brands include Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts and Hampton Inn.

At $1.25bn, Hilton's IPO would be the largest for a lodging company, surpassing Hyatt Hotels' $1.09bn offering in 2009. The stock sale will let New York-based Blackstone start realising gains from its biggest single investment, with almost $7bn of equity invested from its property and other funds. The world's largest manager of alternative assets will own a majority of the voting power in Hilton following the IPO, the filing shows.

Deutsche Bank, Goldman Sachs Group, Bank of America and Morgan Stanley will arrange Hilton's IPO, the filing shows. The same banks and JPMorgan Chase are also helping the company refinance about $13.5bn in debt before the stock sale, a person familiar with the matter has said.

At least two Blackstone-backed companies have gone public in the past year, according to data compiled by Bloomberg. SeaWorld Entertainment raised $807.3 million in April, including an overallotment option. Pinnacle Foods, the maker of Hungry-Man dinners, raised $667m in an IPO in March. SeaWorld has gained more than 6 per cent since its IPO, while Pinnacle has risen about 35 per cent.

* With Bloomberg

Published: September 12, 2013 04:00 AM

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