Blackstone Big Winner In Hilton IPO

Dec 13 2013 | 1:11pm ET

The Blackstone Group turned its potentially disastrous purchase of Hilton Worldwide Holdings into a very handsome paper profit when it took the famed hotel chain public yesterday.

Hilton returned to the public markets on the New York Stock Exchange, giving it a valuation of $20 billion. Blackstone did not sell any of its stake in the deal, so its 750 million shares are worth about $16.1 billion.

And while the official purchase price for Hilton in 2007 was $26 billion, Blackstone put up only $5.7 billion, borrowing the rest. When the financial crisis struck, Blackstone wrote down much of its investment in Hilton and restructured its debt, buying some back from its banks for just 35 cents on the dollar. All told, Blackstone put up only $6.5 billion of its own money—and now owns three-quarters of Hilton.

During its stewardship, Blackstone also used Hilton's profits to pay down the roughly $20.5 billion in debt it took out in 2007. And some of the $2.4 billion raised yesterday will pay down even more.

"They've accomplish a lot through leverage," former Hilton CFO Robert La Forgia told The New York Times. "They almost lost the company, and might have without the debt restructuring.


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