November 6, 2009
Following the fourth-largest initial public offering this year, according to Renaissance Capital in Greenwich, Conn., Hyatt shares opened at $27 and closed at $28 on the New York Stock Exchange.
The hotel chain sold 38 million Class A common shares at $25 each in Wednesday’s IPO.
“There were considerably more shares wanted than were granted,” said John Arabia, senior lodging analyst at Green Street Advisors. “And the price was very compelling relative to the valuation of some of it peers.”
Hyatt’s dual-class stock structure had been criticized because Pritzker family members wield 10 times more voting power per share than Hyatt investors.
Lubos Pastor, Charles P. McQuaid professor of finance at the University of Chicago Booth School of Business, said Hyatt picked a good time to go public. The stock market has rallied significantly since March, with investors showing a willingness to get back in as the economy has shown signs of recovery.
Pastor’s research has found that the success of IPOs is most closely tied to a strong market combined with the low cost of capital.
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“It’s cheaper to raise capital today than it was a year ago,” he said.
While some IPOs have pulled out at the last minute due to market concerns, the past two months have seen a wave of new IPOs, a sign of confidence, said Pastor.
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