Hilton Worldwide close to launching IPO

US private equity firm Blackstone Group-owned Hilton Worldwide Inc is close to launching an initial public offering (IPO), which analysts say could value the world's second-largest hotel chain at around $30 billion.

On 12 September Hilton had filed for an IPO with the Securities and Exchange Commission (SEC) hoping to raise up to $1.25 billion (See: Hilton files for IPO after six years of PE ownership. and Blackstone plans $13 bn debt refinancing for Hilton Worldwide ahead of IPO)

Hilton did not disclose what percentage of shares would be offered in the IPO or how they would be priced, but said that it would use the proceeds to reduce debt and fund corporate operations.

Post IPO, Blackstone and its affiliates will continue to hold a majority stake to elect the company's board of directors.

The Virginia-based hotel chain yesterday filed an amended registration statement with the SEC, an indication that it would soon come out with pricing details and fix the timing of the IPO subject to te speed of the regulatory review that is currently underway.

In August,  New York-based Blackstone had tapped  Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley as the main underwriters for the IPO, all  of whom are expected to refinance Hilton's $15.1billion debt prior to the offering.

Blackstone had acquired Hilton just before the global financial crisis in 2007 for $26.9-billion in cash, including assumption of debt of about $7.5 billion (See: Blackstone acquires Hilton Hotels for $26 billion).

The acquisition was the largest purchase of a hotel chain by a private equity firm and Blackstone's biggest investment in a single  property to date.

Since the deal was struck on the eve of the global financial crisis, many analysts had then opined that Blackstone might not get a return on its investment.

Blackstone's funds and co-investors had invested about $5.6 billion through equity and had borrowed $20 billion from a consortium of seven banks to fund the acquisition.

The acquisition had come two years after Hilton Hotels Corporation merged its sister company in the UK with Hilton International, in a $6-billion deal that split off UK bookmaker Ladbrokes into a stand-alone company.

But, barely six months into the acquisition, the global hotel industry went into a downward spin reeling first from the global financial crisis and later from the recession, and Blackstone is reported to have at one point, recorded a paper loss of two-thirds of its $5.6 billion equity investment in the hotel chain.

In February 2010, Blackstone reached a deal with lenders to restructure Hilton's debt by several billion dollars. (See: Blackstone cuts deal to restructure Hilton Hotels debt)

Post recession, Hilton, like other hotel chains, have flourished, and reported a net income of $352 million in 2012 on of $9.28 billion.

When Conrad Hilton opened the first hotel to bear the Hilton name in 1925, he aimed to operate the best hotel in Texas, but today Hilton operates ten brands in 90 countries with 4,000 hotels having a total of 650,000 rooms.

Blackstone is also looking for a sale or an IPO for its other investments in the hotel lodging industry.

Earlier this year it hired JPMorgan Chase & Co and Morgan Stanley to explore a sale or IPO of hotel chain La Quinta Inns & Suites, valued at around $4.5 billion.

It has also filed with the SEC for an IPO for hotel chain Extended Stay America Inc, which it had acquired in 2010 in partnership with Centerbridge Partners and Paulson & Co, for about $3.9 billion.