Blackstone takes Hilton Worldwide public in $2.35 bn IPO

IPO market set to end year on a high thanks to surging optimism and share prices

US hotel firm Hilton Worldwide has raised $2.35 bn in an initial public offering, setting an all-time record for a hotel IPO.

Hilton Worldwide sold 117.6 mn shares at $20 each, pricing the IPO near the top of its range of $18 to $21, the company says in a press release. The IPO also exceeds the company’s initial plans to issue 112.8 mn shares.

Blackstone Group, which bought Hilton Worldwide in a deal that valued the company at $26 bn in 2007 before the global financial crash, will retain a majority stake in the company after shares start trading on December 12. The IPO price gives the hotelier a stock market valuation of about $19.7 bn, and Blackstone’s 72.5 percent stake is worth around $15 bn.

The underwriters have the option to buy 17.6 mn more shares at the market price minus the underwriting discount. If they do so, it will raise the total proceeds of the IPO to $2.7 bn.

‘Hilton Worldwide intends to use the net proceeds from the offering and available cash to repay approximately $1.25 bn of term-loan borrowings outstanding under its senior secured credit facilities,’ the hotel company says.

The IPO of Hilton Worldwide, which owns 4,000 hotels worldwide with a total of 650,000 rooms, comes amid surging stock prices and rising investor optimism in most of the world. This year has also seen a surge in listings activity, with 285 IPOs priced so far in 2013, an increase of 47 percent from 2012. Total proceeds have increased 38.5 percent at the same time to $131 bn, according to IPO research firm Renaissance Capital.

The US has led the IPO market by far this year with 129 IPOs and total proceeds of $47.7 bn, adds Renaissance. Hong Kong comes a distant second, with 32 IPOs valued at $14.1 bn, followed by the UK with 19 IPOs that raised $11.5 bn.

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