Davy clients in $200m windfall from Hilton
Blackstone equity stake in hotels group to deliver for 150 investors
Stockbroker Davy's private clients and other high rollers are set to double their money and net up to $200m when hotel giant Hilton Worldwide floats in New York later this week. The €24bn company is set to raise around €1.8bn on stockmarkets.
Investors assembled by Davy ploughed $100m into private equity group Blackstone's buyout of Hilton Hotels in 2007. That stake is likely to be worth more than $200m now, based on the latest pre-IPO valuations for the iconic hotel group. It is thought that up to 150 Davy private clients are invested in the Hilton Worldwide company.
The Hilton flotation will be the second-biggest IPO in 2013, behind oil pipeline holding company Plains GP Holdings LP, which raised €2.07bn. It will also be bigger than Twitter Inc which raised around €1.34bn.
Blackstone took the company private in a €19.7bn deal, which was one of the largest leveraged buyouts before the crash. However, the timing of the debt-fuelled acquisition caused difficulties as the money markets seized up in the wake of the collapse of Lehman Brothers in late 2008.
The company underwent a major debt restructuring. However, Blackstone was able to steady the finances of the company and return it to health again, with its valuations increasing as the United States economy rebounded.
The iconic Hilton Hotel group was founded by Conrad Hilton – grandfather of vacuous celebrity Paris Hilton – in 1919. It has 540 hotels worldwide including one in Dublin city centre.
The Hilton deal is one of a number of tie-ups between Ireland's biggest stockbroker and the private equity behemoth. In October, Davy private clients also bagged a windfall when its investment in US shopping centre operator Brixmor delivered. The Blackstone-backed real-estate investment trust raised $825m in a US flotation.
The well-heeled clients also made a profit when another Blackstone-led deal came good. A number of Davy private clients had invested in Extended Stay America, which raised $525m on its stock market debut in November.
Davy's clients have also benefited from tie-ins with Tiger Global, which saw Davy invest in Facebook at a very early stage and bank huge profits at the IPO.
Billionaire Blackstone boss Stephen Schwarzman visited Ireland and spoke at a Davy conference in 2010. Blackstone has also been increasingly active in the Irish market, buying up the Burlington Hotel in a €67m deal in November 2012. It also holds a stake in Bank of Ireland, although it trimmed its shareholding last month.
The private equity giant was also tapped up to re-enter the auction for €1.4bn Bord Gais Energy, before the process collapsed last week.