TORONTO (Reuters) - Canada’s Hydro One [HYDRO.UL] drew buying interest from some pension funds that covet such assets, but an initial public offering of the electricity distributor was always the government’s preferred option, Ontario’s finance minister said on Monday.
The IPO, which is expected to close later this week, is set to raise up to C$1.83 billion ($1.4 billion) for Canada’s most populous province, which is only selling a roughly 15 percent stake in the utility.
“If the pension funds had their way, the broadening of the ownership structure in Hydro One wouldn’t have occurred, because they wanted to take it all,” Finance Minister Charles Sousa told media on the sidelines of the P3 2015 investment conference in Toronto.
The privatization of the utility will allow the province to fund transportation infrastructure projects, including public transit, bridges and highways, the government has stated.
“We see the value in ensuring there’s broad ownership,” said Sousa.
Detractors of the plan have questioned the wisdom of selling a stake in the asset that is a cash cow for the province, but the government has said it believes the public benefits even further from broadening the ownership as Hydro One as it will create a stronger-performing and more customer service-focused company.
Hydro One shares priced near the top-end of their expected pricing range, making the IPO one of the largest in Canadian history.
The stock is set to list on the Toronto Stock Exchange under the ticker symbol “H”, and begin trading on Nov. 5.
During the drawn-out IPO exploration process, however, Sousa said the government attracted “lots of interest” from pension funds interested in buying out the asset.
Canadian funds like the Canada Pension Plan Investment Board and its peers like the Ontario Teachers’ Pension Plan and Caisse de dépôt et placement du Québec have been among the world’s most active dealmakers in recent years, making major bets in sectors like energy, infrastructure and real estate.
Reporting by Euan Rocha; Editing by Grant McCool and Muralikumar Anantharaman