It's a suite day for Hilton investors.
Shares gained 7.5 percent to close at $21.50 Thursday after the hotelier raised $2.35 billion, the largest hotel IPO ever. Hilton Worldwide Holdings Inc. is the world's largest hotel group with 665,667 rooms across 90 countries and territories. It operates luxury brands such as the Waldorf Astoria and Conrad Hotels & Resorts but has built much of its recent growth on franchise deals.
Investor demand for IPOs has been strong recently — there have been 218 IPOs in the U.S. this year, the most since 2000, according to IPO research and investment firm Renaissance Capital. And Hilton's offering trumped the $2.1 billion generated by Twitter's IPO last month, as well as proceeds from IPOs of its competitors. The next biggest was Hyatt Hotels Corp.'s $1.1 billion IPO in 2009, according to data provider Dealogic.
Hilton's market value of about $21.2 billion is well above that of other hoteliers. Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. are both worth about $13.8 billion, while Hyatt has a market capitalization of $7.3 billion as of Thursday's close.
Hilton was taken private in 2007 by Blackstone Group LP, a private equity firm. In its initial public offering, the company and a shareholder sold 117.6 million shares at $20 each. Blackstone did not sell any shares in the IPO, and will continue to hold majority voting power in the company. Hilton, based in McLean, Va., plans to use the proceeds from the offering to pay back debt.
Hilton sold 64.1 million shares and a stockholder sold 53.5 million shares. The banks that managed the deal also may buy another 17.6 million shares to cover additional demand. If those sell out, that could bump the proceeds from the IPO up to $2.7 billion. That would make Hilton's deal the second-biggest U.S. IPO of 2013, behind Plains GP Holdings LP at $2.9 billion.
Hilton's shares now trade under the symbol "HLT" on the New York Stock Exchange.