Hyatt listing generates $950m

Hyatt Hotels, the hospitality empire controlled by Chicago's Pritzker family, raised $950m in its initial public offering on Thursday, rebuffing concerns about IPOs and helping to fuel a wider stock market rally.

While IPO activity has picked up in the past few months, two companies have postponed their debuts this week on concerns over economic recovery and investor appetite.

Last week, AEI (A18.SI - news) , the energy-infrastructure company, also dropped its listing only hours after it had reduced the size of the offering by two-thirds due to weak demand. It was the first US-listed IPO this year to be withdrawn after an attempt to price the shares.

"The IPO market has not been healthy," said Scott Sweet, a senior managing director at advisory firm IPO Boutique. "There is also concern that private equity firms are using these [IPOs] as exit strategies and will leave tremendous amounts of debt with the companies."

Of the past seven listings, five had been priced below their indicative ranges, he said. However, Hyatt shares gained 12 per cent to $28 on their first day after they were priced at the top end of estimates at $25.

The offering, which was underwritten by Goldman Sachs (NYSE: GS - news) , ranks as the second-largest IPO on the New York Stock Exchange this year, trailing Banco Santander's $7bn dual-listing in October.

On top of concerns about market conditions, the sale of 38m Hyatt shares had attracted heavy criticism.

The main purpose of the listing was to raise money for members of the Pritzker family who control the 415-hotel chain and who have been locked in quarrels for more than a decade.

In a statement to the Securities and Exchange Commission last month, the company warned disputes between family members could result in "significant distractions to our management, disrupt our business and have a negative effect on the trading price of our Class A common stock."

The Pritzkers plan to retain the bulk of voting rights, giving outside investors no chance of exerting control of the company.

However, investor scepticism suddenly evaporated this week when Hyatt's financial statements and solid balance sheet were revealed, said analysts.

The group was shown to have $1.3bn in cash.