(Adds background, details, analyst comment, paragraphs 3-15)
By John Tilak and Euan Rocha
TORONTO, Oct 29 (Reuters) - Ontario electric utility Hydro
One's HYDRO.UL initial public offering priced at C$20.50 per
share on Thursday, raising C$1.66 billion ($1.26 billion) and
marking one of the biggest IPOs in Canadian history.
The pricing suggested demand was high for a roughly 15
percent stake in the province's largest electric utility.
Earlier this month, the government of Ontario outlined plans
to sell up to 89.25 million Hydro One shares in an IPO that was
expected to price between C$19 and C$21 a share, valuing the
company between C$11.31 billion and C$12.5 billion. urn:newsml:reuters.com:*:nL1N1291UQ
Reuters reported on Wednesday that the offering was expected
to price at the high end of that range. urn:newsml:reuters.com:*:nL1N12S33Y
The shares, which will list on the Toronto Stock Exchange
under the ticker symbol "H", are expected to begin trading on
Nov. 5.
The offering saw "extraordinarily strong demand," said Ed
Clark, chair of the Ontario premier's advisory council on
government assets. "The offering was significantly
oversubscribed."
"This has been textbook run. There's tremendous interest.
The market is obviously enthusiastic about it," said Clark, the
former chief executive of Toronto-Dominion Bank TD.TO .
Some 40 percent of the offering has been allocated to retail
investors, the company said in a statement on Thursday.
If, as expected, the IPO's underwriters exercise the
over-allotment option tied to the deal, the province will raise
about C$1.83 billion in total from the deal.
STRONG DEMAND
The demand underscores interest for non-resource stocks in
Canada, said Colin Cieszynski, chief market strategist at CMC
Markets.
"Having a Hydro One heavyweight will help balance out the
resource-heavy Canadian market," he said, adding that it also
offers an opportunity to invest in a public utility as it has
been "slim pickings" until now.
The privatization of the utility will allow the province to
fund transportation infrastructure projects, including public
transit, bridges and highways, Ontario Minister of Energy Bob
Chiarelli said in a statement.
Royal Bank of Canada RY.TO and Bank of Nova Scotia
BNS.TO are the lead underwriters on the deal.
Other firms including BMO BMO.TO , CIBC CM.TO , TD
Securities TD.TO , National Bank Financial NA.TO , Desjardins
Securities, Raymond James, GMP Securities, Barclays BARC.L ,
Goldman Sachs (N:GS) GS.N and Credit Suisse CSGN.VX were also
involved.
The IPO will come more than a year after PrairieSky Royalty
Ltd's PSK.TO C$1.67 billion offering in 2014.
($1 = 1.3166 Canadian dollars)