April 17, 2015 / 9:19 PM / 4 years ago

Ontario Finance Minister sees pension fund interest in Hydro One

TORONTO (Reuters) - Ontario Finance Minister Charles Sousa said on Friday he expects all of Canada’s major pension funds to be interested in a stake of Hydro One as the province prepares to sell off 60 percent of the provincial electricity transmission utility.

“Right now we know that a lot of the pension companies are eager ... it’s a good mix for their portfolio, they are hungry for places to invest and this is one of those sectors in the economy that gives them comfort,” Sousa said in an interview.

“It’s going to be one of the largest companies in Canada on the Toronto Stock Exchange, and there is huge demand right now ... and we want to make this a retail product too.”

Ontario Premier Kathleen Wynne said on Thursday her Liberal government planned an initial public offering of the utility within months with an eye on generating about C$4 billion from the sale of the shares.

Sousa, who is set to present the province’s budget April 23, reiterated a pledge to balance the budget by 2017-18. In March, Sousa said the 2014-15 deficit is expected to come in at C$10.9 billion ($8.91 billion), below the previous forecast for a C$12.5 billion shortfall.

Canada’s most populous province, which accounts for about 40 percent of the country’s economy, has seen its debt balloon to C$300 billion since 2009 as the Canadian dollar, high-flying at the time, undercut exports and hurt the province’s once-dominant manufacturing sector.

Sousa said while he is optimistic about the province’s economy, he will be conservative with the assumptions which underlie budget projections, having been burned once before by an overly rosy outlook.

“I’ve had all of them (private sector economists) in the office and I take an average of all of their projections for next year and the year after. Some are actually starting to taper down, so I have to be sensitive to that too,” Sousa said, noting forecasts for Ontario’s annual economic growth range between 2.5 percent and 3.3 percent.

“The last thing I want - it happened in 2013, all projections were off, and had we not built in the buffer it would have been worse,” he said.

Sousa said the province’s fiscal blueprint will include targeted measures to rein in tax avoidance and tackle an underground economy that lowers government revenues.

($1 = 1.2238 Canadian dollars)

Editing by Jeffrey Hodgson and Alan Crosby

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