A report from Bloomberg said Blackstone Group is poised to generate a large gain from the initial public offering of Hilton Worldwide Holdings Inc, which is set to happen today. Although the hotel operator was once viewed as a black mark in the real estate record of the private equity group, the report said Blackstone is set to get over $8 billion in paper profits from the IPO. This would come only second to the $10 billion that Apollo Global Management gained in its investment in LyondellBasell Industries in 2008, based on data gathered by Bloomberg. The report added that Hilton would get the number one spot if the shares would increase over one American dollar above the top end of the proposed price range.
The report said the rebound of the largest hotel chain in the world is a victory for Blackstone. It acquired Hilton when the buyout boom neared its close in 2007. When the credit crisis ensured, the private equity firm saw a drop in property values and hotel occupancies, the report stated. The turnaround was a reflection of the steps that Hilton, under Chief Executive Officer Christopher Nassetta, took to raise revenue and profit. The report added that it also reflected a recovery in the lodging and capital markets.
Green Street Advisors Inc Chairman Mike Kirby told Bloomberg, "With Hilton, they demonstrated the best attributes of what private equity advertises itself to be, which is finding and improving companies with an intensive dose of new and better management. The commercial real estate market has had an amazing recovery from its near-death experience, and that clearly helped." Green Street Advisors Inc is a property research firm based in Newport Beach, California.
Two sources told Bloomberg that the Hilton sale was already oversubscribed more than five times as of yesterday afternoon. Hilton, together with its existing stakeholders, will be selling 112.8 million shares in the IPO at a price range of $18 to $21 apiece. Blackstone, however, will not be selling in the share sale, the report said.
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