Ontario Government Aims to Finish Hydro One IPO by November

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Ontario’s provincial government said it aims to complete the initial public offering of Hydro One Ltd. shares by early November after filing documents in what is expected to be Canada’s largest IPO in 16 years.

The amount and share price weren’t disclosed in Friday’s filing to Canada’s securities regulator. The province said in April that it planned to sell about 15 percent of Ontario’s largest electricity transmission and distribution system in an IPO of as much as C$2.25 billion ($1.7 billion).

The market volatility that’s cooled the pace of IPOs in the past couple months shouldn’t affect demand for Hydro One, said Ed Clark, chairman of a council advising the government on asset sales. An environment of low interest rates makes stocks that offer steady yields an attractive investment, he said.

“There’s no question that this, as a general matter, is in fact a favorable environment for yield stocks, which is what this is,” Clark told reporters at a briefing. “But what the world will be like in the end of October or early November, when we price it, we’ll have to see.”

Marketing of Hydro One’s offering will begin in October and the IPO is expected to be completed by November, the province said. At least 25 percent of the IPO will be sold to retail investors and Hydro One will be listed on the Toronto Stock Exchange.

The government reiterated it will remain the largest shareholder with a minimum 40 percent stake and that no other shareholder group can own more than 10 percent.

Market Conditions

With about 1.4 million customers and C$23.1 billion of assets, Hydro One has been estimated by the province to have an equity valuation of C$13.5 billion to C$15 billion. The money raised from the sale will go toward debt repayment, transit and infrastructure, the government said.

The initial sale excludes Hydro One’s Brampton distribution network, which was sold to a group of municipally owned utilities that are merging as part of the government’s plan.

Royal Bank of Canada and Bank of Nova Scotia are leading a group of 16 banks on the sale. The group includes Barclays Plc, Goldman Sachs Group Inc and Credit Suisse Group AG.

An IPO of C$2.25 billion would be the largest since the C$2.49 billion initial stock sale by Manulife Financial Corp. in


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