Updated from 8:07 a.m. ET to reflect MLV & Co. analyst comments.
NEW YORK (TheStreet) -- Singapore's sovereign wealth fund GIC Private Ltd pumped equity into Blackstone Group (BX)-owned Hilton Worldwide when the company needed to restructure its debt in the credit crunch that ensued after the hotel chain's 2007 leveraged buyout. Now, GIC is prepared to hold onto a large chunk of Hilton Worldwide shares as the company moves towards an initial public offering.
In contrast to GIC, other providers of emergency relief to Hilton during its debt restructuring will be cashing out of their holdings in the company's IPO. GIC is poised to be a 5% stakeholder in Hilton when the company lists its shares, in what could be a $2.4 billion IPO that would be the biggest in the U.S. hotel industry.
According to IPO documents, GIC is expected to own roughly 49.5 million shares in the company shares, or about 5% of the McLean, Va.-hotelier's outstanding stock.That stake may underscore the Singaporean fund's ties to Blackstone and its white-knuckle Hilton investment. GIC is also is an owner of franchised Hilton hotels, after acquiring three Waldorf-Astoria branded hotels in March and appears to be an active investor in franchised hotel properties across the U.S.
"It is not atypical for them," Ryan Meliker, a senior analyst at boutique investment bank MLV & Co. said of GIC's Hilton investment. The sovereign wealth fund is a major holder of U.S. real estate and lodging properties franchised by the likes of Marriott, Hyatt and Starwood.
While GIC will hold a 5% stake in Hilton, there will be some participants in the debt restructuring that opt for a cash payment. Hilton's IPO prospectus states that the company expects to sell about 64.1 million shares to public stock investors, while a selling stockholder will offer an additional 48.7 million shares. Contrary to some media reports, that selling shareholder, referenced to as "Hilton Global Holdings LLC" won't be The Blackstone Group. The identity of all selling shareholders could not be determined. "The members of Hilton Global Holdings LLC that have elected to receive a cash payment are former lenders to us (or their transferees) who received their interests in Hilton Global Holdings LLC as part of our 2010 debt restructuring," Hilton states in its IPO filing.
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