Hydro One shares hit TSX in largest IPO in Canada in 15 years
Despite public outcry, three more offerings of roughly the same size are expected to follow, which are anticipated to generate a total of $9 billion
TORONTO—Hydro One, the giant transmission utility whose sale has sparked political controversy in Ontario, climbed in early trading during its debut on the Toronto Stock Exchange in one of the largest initial public offerings in Canada in 15 years.
Shares started trading at $21.50 Thursday, up from the IPO price of $20.50.
The stock rose higher shortly after the morning bell, trading at around $21.60 shortly before 10 a.m. on high volume of more than 10 million shares.
The Ontario government has said it plans to use the estimated $1.66 billion generated by selling 13.6 per cent of its stake in the company to fund transit and infrastructure projects.
The sale of 81.1 million shares is the first step in the government’s plan to gradually part ways with 60 per cent of the electrical utility behemoth.
Three more offerings, roughly the same size, are expected to follow, which are anticipated to generate a total of $9 billion.
Roughly $5 billion of that total would go towards paying down the utility’s debt, while the remainder would be used to fund the province’s 10-year, $130-billion transit and infrastructure plan.
Royal Bank of Canada and Bank of Nova Scotia, who are acting as underwriters in the utility’s public debut, also have an option to purchase an additional 8.15 million shares, which would bring proceeds from the IPO to a total of $1.83 billion.
The last time the Canadian markets saw such a large IPO was in March 2000, when Sun Life raised $1.8 billion in its public market debut.
The Ontario Liberal government’s decision to sell Hydro One has ignited outcry from both the Progressive Conservatives and the New Democrats who say it will drive electricity rates higher.
The province’s budget watchdog has also cautioned that selling the entity, which turns over roughly $750 million a year to the government, could push the province further into debt in the long term.