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Hilton plans the biggest hotel IPO

Staff writer |
Hilton Worldwide, Inc. said its initial public offering would raise up to $2.37 billion. That would be the biggest-ever hotel IPO.

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Hilton is expected to launch its initial public offering this month and the sale of about 11.5 percent of its shares would value the company at up to $32.5 billion, including debt. That means Blackstone Group LP would more than double its investment. Blackstone took Hilton private in 2007 for $26.7 billion, including debt, and it has invested in total about $6.4 billion in Hilton and its 76.2 percent stake after the IPO would be worth up to $15.7 billion.

Its private equity and real estate funds, which provided the equity for the leveraged buyout in 2007, are not selling any shares in the IPO. A Blackstone debt fund has registered to sell Hilton shares in the IPO equivalent to a roughly 0.5 percent stake, according to a regulatory filing.

The U.S. hotel industry has been recovering with room rates and occupancy levels expected to increase in 2014, according to PricewaterhouseCoopers. The Dow Jones U.S. Hotels index .DJUSLG has risen 30 percent so far this year.

Hilton's IPO will be the second-biggest IPO in 2013, behind oil pipeline holding company Plains GP Holdings LP (PAGP.N), which raised $2.82 billion.

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