October 9, 2015 / 7:39 PM / in 2 years

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

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.

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 (PSK.TO) 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 (RY.TO), Scotia Capital (BNS.TO), BMO Nesbitt Burns (BMO.TO), CIBC (CM.TO), TD Securities (TD.TO), National Bank Financial (NA.TO), Desjardins Securities, Raymond James, GMP Securities, Barclays Capital (BARC.L), Goldman Sachs (GS.N) and Credit Suisse Securities CSGN.VX.

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

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