Hydro One makes solid debut on Toronto stock market in biggest IPO in 15 years

Hydro One made a solid debut Thursday on the Toronto stock market in one of the largest initial public offerings in Canada in 15 years, even as controversy continued to swirl over the Ontario government's plan to partially sell the giant transmission utility.

Future offerings will net greater proceeds benefiting all Ontarians, finance minister says

Alexandra Posadzki The Canadian Press Posted: Nov 05, 2015 1:17 PM EST | Last Updated: November 5, 2015

Hydro One shares climb

9 years ago

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The transmission utility traded high on the TSX in 1 of the largest initial public offerings in Canada

Hydro One made a solid debut Thursday on the Torontostock market in one of the largest initial public offerings inCanada in 15 years, even as controversy continued to swirl over theOntario government's plan to partially sell the giant transmissionutility.

The company's stock closed at $21.62, up 5.46 per cent or $1.12from the IPO price of $20.50, with more than 18 million shares sold.

Finance Minister Charles Sousa said he was pleased to see theoffering of Hydro One shares was being "well-received" on themarkets.

"Every uptick on the market is an indication the futureofferings will net even greater proceeds benefiting all Ontarians,"Sousa said.

"It will mean billions of dollars being reinvested into oureconomy, into building new assets, into producing greater

revenues."

The Opposition Progressive Conservatives said the governingLiberals wanted the Hydro One sale to "give a big payout to theirwell-heeled friends," while the New Democrats warned it would driveup electricity rates and urged the government to reverse course.

"It is not too late to stop the next block of shares from goingto market," said NDP Leader Andrea Horwath. "Selling 15 per centis bad, but selling 60 per cent is a disaster."

Stephen Lingard, senior vice-president at investment firmFranklin Templeton Solutions, said it's not a guarantee thatelectricity rates will go higher as a result of the privatization ofHydro One.

"Generally speaking, privatization focuses on maximizingprofits, and sometimes that means raising prices, but it can alsomean squeezing costs and focusing on margins," Lingard said.

"So it's not an automatic that prices go up, but certainly thatwould be a concern initially for ratepayers."

The sale was also opposed by some business groups, unions,municipalities and all independent officers of the legislature,including the auditor general, ombudsman and financialaccountability officer, who warned it would mean a short-term gainbut in the long run would hurt the province's bottom line.

The government plans to use the estimated $1.66 billion generatedby selling 13.6 per cent of its stake in Hydro One to help fundtransit and infrastructure projects. The sale of 81.1 million sharesis the first step in the government's plan to gradually part wayswith 60 per cent of the electrical utility behemoth.

Three more offerings, roughly the same size, are expected tofollow, which are anticipated to generate a total of $9 billion.

Roughly $5 billion of that total would go towards paying down the$8.5 billion in stranded debt left over from what was once OntarioHydro, while the remainder would be used to fund the province's10-year, $130-billion transit and infrastructure plan.

Royal Bank of Canada (TSX:RY) and Bank of Nova Scotia (TSX:BNS),who are acting as underwriters in the utility's public debut, alsohave an option to purchase an additional 8.15 million shares, whichwould bring proceeds from the IPO to a total of $1.83 billion.

The last time the Canadian markets saw such a large IPO was inMarch 2000, when Sun Life raised $1.8 billion in its public marketdebut.

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Hydro One makes solid debut on Toronto stock market in biggest IPO in 15 years

Future offerings will net greater proceeds benefiting all Ontarians, finance minister says

Hydro One shares climb

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