Hydro One TSX Symbol H
Ontario's high-voltage Transmission System Goes on the Market
Hydro One distributes electricity directly to 1.4 million homes and small businesses, about 25 per cent of the province's hydro customers, mainly in rural areas
Toronto - This is a big deal. "It is in fact the largest transaction in [Ontario's] history," Finance Minister Charles Sousa told news agencies on Wednesday. The last time an initial public offering (IPO) of this magnitude hit a Canadian stock market was in 2000, when Sun Life Financial began trading publicly, raising nearly $1.8 billion.
The last time any Canadian government federal or provincial raised this much money from selling off a Crown corporation was in 1995, when Ottawa's IPO for CN Rail raised $2.26 billion.
Sousa said the initial public offering is already "oversubscribed," meaning investors have placed advance orders for more shares than are available.
The province is floating a first tranche of 81.1 million shares in Hydro One at the price of $20.50, potentially bringing in $1.66 billion. At 8 am RBC was listing pre-trading bids at $26.00.
This is the first phase of Premier Kathleen Wynne's plan to privatize most of Hydro One. Her government is prepared to sell off up to 60 per cent of the utility, aiming to fetch some $9 billion that would be curbed to infrastructure projects the province currently needs.
Some $5 billion of the final share sales are earmarked for Hydro One's debt; the rest, says Wynne, will go toward Ontario's $130-billion commitment to building new infrastructure, such as transit.
"That historic investment in infrastructure is not possible unless we have the resources," said Wynne on Friday, in her last news conference before leaving the country on a 15-day trade mission. "Part of that is leveraging the assets that we own, including Hydro One."