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Blackstone Dominated the Top Travel IPOs of 2013

@denschaal

Dec 31, 2013 9:00 am

Skift Take

Blackstone will be hard-pressed to repeat its impressive travel-IPO performance in 2014, although La Quinta is on tap. Hotels and attractions, and not tech, were the sexiest things going in 2013.

— Dennis Schaal

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Tyrone Siu  / Reuters

Stephen A. Schwarzman, Chairman, CEO and Co-Founder of the Blackstone Group, speaks during a news conference in Hong Kong October 26, 2012. Tyrone Siu / Reuters


Blackstone had its hand in four of the twelve major travel-related initial public offerings of 2013, with the $2.35 billion Hilton Worldwide IPO — the largest in hotel industry history and the biggest of the year — its signature travel transaction.

Blackstone also took Extended Stay America and SeaWorld Entertainment public, and was a leading stakeholder in the year’s second largest IPO, Merlin Entertainments, which raised $1.57 billion.

There were three tech IPOs of note in 2013, namely China’s travel-search engine Qunar ($677 million), in-flight Wi-Fi provider Gogo ($187 million), and event-management software company Cvent ($117.6 million).

But, it was hotels and a casino, including Hilton Worldwide ($2.35 billion), Extended Stay America ($565 million) and Macau Legend Development ($282 million), and attractions Merlin Entertainments ($1.57 billion), SeaWorld Entertainment ($702 million), and Empire State Realty Trust ($929.5 million) that dominated as categories.

Market conditions were seemingly considerably more positive in the second half of 2013 for companies to making their public debuts as nine of the 12 IPOs occurred from July to December, and these were back-loaded toward the fourth quarter, which saw half of the dozen IPOs come to fruition.

Norwegian Cruise Line was noteworthy for getting off the mark earliest in the year, raising $447 million in January, and it was the only IPO of note in the first quarter.

Shareholders who bought into the IPOs when they came to market have generally done from OK to fairly well, with the share prices of nine of the 12 stocks rising since their introductions through December 27.

Most of the travel-related IPOs took place on U.S. exchanges. The New York Stock Exchange landed five, and Nasdaq three.

However, the Merlin Entertainments IPO, the second largest travel-related IPO of the year, was carried out in London.

Here’s more about the dozen travel IPOs of 2013:

1. Hilton Worldwide raised $2.35 billion in its December 12 IPO as owner Blackstone sought to have Hilton pay down debt. The IPO on the NYSE was the largest in hotel industry history. Shares opened at $21.30 and closed flattish on December 27 at $21.60.

2. Merlin Entertainments, which is the largest theme park operator in Europe, and includes Madame Tussauds among its playthings, raised $1.57 billion in its November 8 IPO in London. Owners Blackstone, CVC and Kirkbi A/S all reduced their stakes, and proceeds went toward reducing debt. The stock opened at $5.35 on November 8, and closed at $5.94 on December 27.

3. Empire State Realty Trust, which owns the Empire State Building and 20 other office properties in the New York area, executed the largest-ever IPO for a U.S. real estate investment trust, raising $929.5 million on October 3. The IPO was mostly real estate-related, although the Empire State Building office complex and tourist destination was the most prominent part of the mix. The stock began trading at $13 on the day of the IPO, and closed at $15.22 on December 27.

4. After flirting with a takeover bid, Blackstone’s SeaWorld Entertainment went public on April 19 and raised $702 million, all of which went to Blackstone investors. SeaWorld went public before having to deal with any fallout from the TV debut of a ravaging documentary on its whale-handling, Blackfish, which CNN took a stake in. SeaWorld shares initially traded on NYSE for $27 per share, and closed December 27 at $28.63.

5. China-based Qunar is a force to be reckoned with in the travel industry as it is controlled by Baidu, the leading search engine in China. Qunar raised $677 million in its November 1 coming out party on Nasdaq,  with the net proceeds going for general corporate purposes, product development, and to expand its sale and marketing efforts. Its American depository shares kicked off at $15, and closed at $26.34 on December 27.

6. Blackstone’s Extended Stay America raised $565 million on November 12, an endorsement of Blackstone’s stewardship, the hotel industry as an investment,  and the limited services sector, in particular. The IPO was a precursor of what was to come in a bigger way with Hilton Worldwide a few weeks later. Extended Stay America’s shares opened at $20 on November 12, and closed at $25.42 on December 27.

7. The only cruise line to go public in 2013, Norwegian Cruise Line’s January 17 IPO generated $447 million, which went to trim its debt. Shares opened at $25 on January 17, and closed on December 27 at $35.12 on Nasdaq.

8. Positioned as a long-haul budget carrier, AirAsia X, part of Malaysia’s AirAsia Group, raised $310 million on the Malaysia exchange in a July 10 IPO that pundits saw as disappointing. The carrier planned to use the proceeds to purchase aircraft and expand its route network. Shares opened at around $0.38 on July 10, and closed on December 27 at $0.30.

9Macau Legend Development Ltd. debuted in Hong Kong on July 5, but the share sale was half the size of initial hopes due to unstable market conditions. Controlled by former Macau politician David Chow, the company owns entertainment and casino facilities in Macau, and raised $282 million in its IPO. Much of the proceeds would go toward financing construction of new properties. Investors are happy, though, as the share price debuted at around $0.32, and closed on December 27 at $1.05.

10. Brazil’s largest travel agency, The Carlyle Group’s CVC Brasil Operadora & Agencia de Viagens SA, went public in Brazil on December 5, raising $264 million in a transaction that some observers thought valued the company below expectations. The net proceeds went to pay off existing shareholders. Its shares began trading on December 5 at around $6.80, and closed on December 27 at $6.38.

11. Gogo Inc., the U.S.-based in-flight Wi-Fi provider, executed a long-awaited IPO on June 21, raising $187 million for international expansion, and sales and marketing. None of the proceeds were to go toward reducing debt. Dominant among North American airlines for its air-to-ground-based Wi-Fi, Gogo took about 19 months to get out of the gate as it filed its registration statement for the IPO on December 23, 2011. Gogo’s shares began trading on Nasdaq on June 21, 2013, at $17, and closed on December 27 at $25.46.

12. Event-management software provider Cvent, based in McLean, Virginia, debuted on the NYSE on August 9, and raised $117.6 million for working capital and general corporate purposes.  Shares opened on August 9 at $38, and closed on December 27 at $36.19

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