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Ontario to raise up to C$1.87 billion in Hydro One IPO

Reuters

By John Tilak and Euan Rocha

TORONTO (Reuters) - The Canadian province of Ontario expects to raise as much as C$1.87 billion ($1.44 billion) through the sale of a 15 percent stake in its electric utility Hydro One Ltd, according to a regulatory filing on Friday.

The government plans to sell up to 89.25 million Hydro One shares in an initial public offering likely to be priced between C$19 and C$21, pegging the overall value of the company between C$11.31 billion and C$12.5 billion.

The Hydro One offering, which comes in the aftermath of a sharp selloff in Canadian public markets over the summer, is set to raise less funds than the province had initially anticipated.

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In a report in April, a special advisory council appointed by the government valued a 15 percent stake in the company at C$2.03 billion to C$2.25 billion. The report valued the entire company between C$13.5 billion and C$15 billion.

The IPO as it stands will only raise C$1.87 billion if it prices at the top end of a C$19 to C$21 a share range and if the bookrunners on the IPO tap an over-allotment option tied to the offering.

If the over-allotment option is not exercised, the offering is expected to raise C$1.54 billion to C$1.7 billion.

Despite the less-than-stellar valuation, the Hydro One IPO could one of the biggest initial public offerings in Canadian history. PrairieSky Royalty Ltd's (Toronto:PSK.TO - News) C$1.67 billion IPO last spring is the biggest to date in the Canadian market, according to Thomson Reuters data.

Underwriters of the offering include RBC Dominion Securities (Toronto:RY.TO - News), Scotia Capital (Toronto:BNS.TO - News), BMO Nesbitt Burns (Toronto:BMO.TO - News), CIBC (Toronto:CM.TO - News), TD Securities (Toronto:TD.TO - News), National Bank Financial (Toronto:NA.TO - News), Desjardins Securities, Raymond James, GMP Securities, Barclays Capital (LSE:BARC.L - News), Goldman Sachs (NYSE:GS - News) and Credit Suisse Securities (VTX:CSGN.VX - News).

(Reporting by Euan Rocha and John Tilak; Editing by Diane Craft and Tom Brown)