UPDATE 5-Hyatt stock rises 12 pct in NYSE debut

* Hyatt shares up 12 pct in NYSE debut

* Strong balance sheet, industry outlook spur shares

* Second-largest IPO on NYSE this year (Recasts first three paragraphs; adds quotes from San Francisco strike, background on Boston strike)

By Deepa Seetharaman

NEW YORK, Nov 5 (Reuters) - Hyatt Hotels Corp (H.N) shares climbed 12 percent in their debut on Thursday as investors bet the company's strong balance sheet means it will be able to grow at a rapid pace when the industry eventually rebounds.

Hyatt's initial public offering comes as lodging stocks are on the mend. The Dow Jones U.S. Hotels index has shot up 55 percent this year on signs of an economic recovery.

The company sold 38 Class-A million shares at $25 apiece on Wednesday, to raise $950 million for the controlling Pritzker family. The company's market capitalization after its first day of trading was $1.06 billion.

In trading on Thursday, shares rose as high as $28.25 and closed at $28 on the New York Stock Exchange.

Hyatt's IPO is the second-largest on the NYSE this year after Banco Santander (BSBR.N). Ancestry.com Inc (ACOM.O) also went public on the Nasdaq and its shares closed more than 5 percent higher to $14.20. [ID:nN0589649]

"Finally we had two deals that were a lot better quality than what we had been seeing in the last several weeks," said Scott Sweet, a senior managing partner at advisory firm IPO Boutique. "It gives quality deals (next week) momentum."

Discount retailer Dollar General and youth clothing chain rue21 Inc are slated to go public next week.

Little more than half of Hyatt's shares exchanged hands Thursday, Sweet said. Typically 80 percent of shares or more trade in a stock's debut.

"Goldman did a good job locking these shares up and putting it in good hands that are likely to hold," Sweet said. "That would account for the reasoning behind why this stock has continued to advance from $27 to $28."

The company's underwriters, led by Goldman Sachs Group Inc (GS.N), will have one month to exercise an option to buy more shares. If so, that fresh capital will go straight to Hyatt.

FIVE TIMES THE CASH

Hyatt's debut may also be good news for privately-held Hilton Worldwide, should owner Blackstone Group (BX.N) decide to try and exit it in the future. Blackstone is in talks over reducing debt at the chain, according to a source. [ID:nN28299183]