Hilton could raise an additional $353 million if underwriters sell extra shares to meet demand, increasing the total amount of the IPO to $2.7 billion. That would make it the second-largest U.S. IPO this year, after Plains GP Holdings LP, an affiliate of an oil and gas pipeline company that raised $2.91 billion in October. Hilton surpassed Hyatt’s $1.09 billion sale in November 2009 as the biggest lodging IPO, based on data compiled by Bloomberg.
After the IPO, Blackstone will hold about 750.6 million Hilton shares, according to the prospectus, a stake of 76.2 percent that is valued at about $15 billion.
While Hilton owns 10 hotel brands from luxury to budget chains, it lacks a “boutique” brand to compete with Starwood’s W Hotels, Hartwich wrote. Hilton also owns stakes in or leases 156 hotels, including the Waldorf Astoria in New York and the Hilton Hawaiian Village in Honolulu.
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The company is likely to eventually sell some of its iconic properties, Hartwich said.
“These ‘super tanker’ hotels make up a large portion of value,” he said. “While Hilton is content owning hotels today, the company is likely to eventually monetize its owned portfolio.”
A company whose investments are managed by GIC Pte, Singapore’s sovereign-wealth fund, will own 49.5 million shares, or 5 percent. Christopher Nassetta, Hilton’s president and chief executive officer, will hold about 7.6 million shares.
Selling shareholders included a unit of Goldman Sachs Group Inc. The bank, which is also one of the underwriters and a lender to Hilton, will receive more than 5 percent of the offering proceeds, regulatory filings show.
Deutsche Bank AG, Bank of America Corp. and Morgan Stanley also managed the offering. The shares will be listed on the New York Stock Exchange under the symbol HLT.
Hilton -- whose brands include Waldorf Astoria, DoubleTree, Homewood Suites and Hampton Inn -- dates to 1919, when founder Conrad Hilton bought his first hotel in Cisco, Texas. The company reported 2012 net income of $352 million, up 39 percent from a year earlier, on revenue of $9.3 billion.
This year has been the busiest for real estate IPOs since 2004, according to data compiled by Bloomberg, and that trend may continue as hotel stocks including Marriott, Starwood and Hyatt have climbed more than 20 percent this year.
Prince Alwaleed bin Talal, the Saudi billionaire with stakes in companies including Citigroup Inc., is weighing options including an initial public offering for Four Seasons Holdings Inc. and Fairmont Hotels & Resorts Inc., he said in an interview with Bloomberg TV last month.
“The hotel industry is facing major upside right now,” Alwaleed said at a conference hosted by Bloomberg LP in November. “This may go on another three or four years.”
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