Vehicles travel on the Highway 407 toll road north of Toronto.Louie Palu/The Globe and Mail
More numbers are out on the initial public offering of TransAxio Highway Concession Inc., and the key for many investors is that the highway owner will sport a dividend yield of 2.4 per cent to 2.6 per cent.
The initial public offering is looking to price in the $15 to $16 range for each subscription receipt, for a total size of $850-million to $900-million.
SNC-Lavalin Group Inc. announced last week that it would go ahead with the IPO of the newly created TransAxio to hold a stake in the 407 Express Toll Route north of Toronto.
The dividend will be a key part of the sales pitch, as the TransAxio offering will be aimed at investors seeking yield. While it's not a big yield off the top, one of the appeals of the highway stake TransAxio plans to acquire is well known to people who drive it -- the owners can raise tolls at will.
TransAxio will use the offering's proceeds to trump the Canada Pension Plan Investment Board's offer to buy an additional 10 per cent stake of the 407 ETR from Ferrovial SA for $894-million. (CPPIB plans to pick up another 30 per cent stake by acquiring Australian firm Intoll Group.)
CIBC World Markets is leading the IPO of subscription receipts, which are securities that exchange into shares once a transaction closes (i.e., when TransAxio acquires the 10 per cent stake). Closing is expected for early November.