- Government to sell up to 15% stake of utility in initial sale
- Hydro One would be valued at as much as $9.7 billion
Ontario’s provincial government is seeking to raise as much as C$1.7 billion ($1.3 billion) from selling a minority stake in its Hydro One Ltd. utility, an amount less than initial guidance in April from Premier Kathleen Wynne’s government.
Hydro One plans to sell 81.1 million shares -- or about a 14 percent stake -- for C$19 to C$21 apiece in the initial public offering of Ontario’s largest electricity transmission and distribution system, according to a regulatory filing Friday. Toronto-based Hydro One would be valued at as much as C$12.5 billion, based on 595 million shares outstanding.
Underwriters led by Royal Bank of Canada and Bank of Nova Scotia have the option to sell an additional 8.15 million shares if demand warrants, increasing the size to as much as C$1.87 billion, or a 15 percent stake. The provincial government said six months ago that it would seek as much as C$2.25 billion.
The largest Canadian IPO in the past decade was PrairieSky Royalty Ltd., which raised C$1.67 billion in a share sale last year, including an overallotment.
Hydro One is being marketed to institutional investors this month, with plans to complete the initial share sale by November. At least 25 percent of the IPO will be sold to retail investors, the province said last month. Hydro One has about 1.2 million customers and C$23 billion of assets, according to regulatory filings. Money raised from the sale will go toward debt repayment, transit and infrastructure, the government said.
Hydro One said in a separate statement that it expects to pay a cash dividend to the province of C$800 million instead of the C$1 billion previously disclosed, reflecting a revised estimate of payments-in-lieu of taxes.