Blackstone Investors Set to See First Cash From Hilton IPO

Blackstone Group LP is planning its first sale of Hilton Worldwide Holdings Inc. shares, a step toward returning some cash to the buyout firm’s investors after the biggest initial public offering of a U.S. hotel company.

Hilton registered to sell 90 million shares on Blackstone’s behalf, according to a filing today from the McLean, Virginia-based hotel operator. The world’s largest lodging company by market value has climbed 17 percent since raising $2.35 billion in its Dec. 11 IPO. The underwriters will be allowed to buy another 13.5 million shares if they sell the initial amount.

Blackstone is taking advantage of stocks at record highs to start to return money from its largest-ever investment by the amount of equity staked. The New York-based firm’s $26 billion purchase of Hilton in 2007 came at the tail end of the buyout boom. Since then, the rebound in capital markets and the travel industry has catapulted the deal to be among the most profitable private-equity acquisitions of all time.

Blackstone didn’t sell any Hilton stock in the IPO. It held 752.5 million shares, or a 76 percent stake, at March 31, according to data compiled by Bloomberg.

Chairman and Chief Executive Officer Stephen Schwarzman said on an earnings conference call in October that Blackstone is moving into a cycle of “very high” potential for large realizations and consequent gains. The company probably will be a large Hilton shareholder “for many years to come,” he said.

More IPOs

The firm has planned other stock sales following a wave of property IPOs completed toward the end of 2013. Brixmor Property Group Inc., a New York-based shopping-center landlord that went public in October, filed May 27 for a secondary offering by Blackstone of 25 million shares. That would reduce the firm’s stake to about 69 percent from about 77 percent, according to the regulatory filing.

Extended Stay America Inc., a joint investment by Blackstone, Centerbridge Partners LP and Paulson & Co., yesterday registered to sell 21 million paired shares of its stock on behalf of the holders. The Charlotte, North Carolina-based lodging chain raised $565 million in its Nov. 12 IPO.

Blackstone acquired Hilton, then known as Hilton Hotels Corp., in October 2007. Under Chief Executive Officer Christopher Nassetta, Hilton relocated its headquarters from Beverly Hills, California, and expanded its room count by more than a third, almost all of it outside the U.S.

The underwriters on the sale are Deutsche Bank Securities Inc., Bank of America’s Merrill Lynch unit and Morgan Stanley, according to the filing.