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$1.7B raised after secondary offering of Hydro One shares, OPG buys in

TORONTO – The Ontario government has concluded a secondary offering of Hydro One shares on the Toronto Stock Exchange, raising $1.71 billion.

More than 72.4 million shares in Hydro One (TSX:H) were sold at $23.65 apiece.

Crown-owned Ontario Power Generation bought nine million shares, representing about 1.5 per cent of stock in Hydro One, a former Crown corporation.

A spokesman for the Energy Ministry says OPG purchased the shares to distribute to workers, who were promised them in exchange for increased pension contributions in new collective agreements signed last year.

Members of the Power Workers’ Union will get Hydro One shares worth 2.7 per cent of their salaries every year while members of the Society of Energy Professionals will get shares worth two per cent of their salaries annually.

Under an over-allotment option open for up to 30 days, the province could sell nearly 10.9 million more shares at the same price to raise an additional $257.8 million.

Hydro One’s initial public offering on the TSX, one of the biggest IPOs in Canada in 15 years, was completed Nov. 11.

The provincial government’s plan to sell 60 per cent of the transmission utility has stoked an outcry from some, including both opposition parties, which have expressed concern that the move will sap Ontario of long-term revenue while driving up electricity rates.

But the governing Liberals have said the proceeds from the Hydro One sale are needed to boost the economy and provide for infrastructure investment.

Two more offerings, roughly the same size, are expected to follow in a bid to generate a total of $9 billion.

After the close of the secondary offering, made through a syndicate of underwriters led by RBC Capital Markets (TSX:RY) and Scotiabank (TSX:BNS), the province continues to hold about 427.7 million common shares representing about 71.9 per cent of the company.