By Hui-yong Yu and Lee Spears
Hilton Worldwide Holdings Inc., the hotel operator owned by Blackstone Group LP (BX), filed to raise $1.25 billion in a U.S. initial public offering as lodging shares trade at close to their highest level in six years.
The world’s largest hotel chain plans to use proceeds from the offering to pay down debt, according to a regulatory filing today. New York-based Blackstone, the world’s largest manager of alternative assets, will own a majority of the voting power in Hilton following the IPO, the filing shows.
At $1.25 billion, the IPO would be the largest for a lodging company and would move Blackstone closer to realizing gains from its biggest single investment, with more than $6 billion of equity invested from its real estate and other funds. The offering coincides with increases in industry revenue and income that have spurred stock gains for hoteliers such as Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. Both are trading close to their highest levels since 2007.
“For Blackstone, it doesn’t make sense to keep something this valuable on the books,” said Jeffrey Sica, who oversees about $1 billion as chief investment officer of Morristown, New Jersey-based Sica Wealth Management LLC. “Hilton’s business has been doing well, so it makes very good sense for them to do it now.”
The McLean, Virginia-based hotel operator didn’t say how many shares it will offer or at what price. The offering amount is a placeholder used to calculate fees and may change. Deutsche Bank AG, Goldman Sachs Group Inc., Bank of America Corp. and Morgan Stanley will arrange Hilton’s IPO, the filing shows…