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Brazil's Equatorial wins key role in Copasa privatization with $1.1 billion bid
Brazil's Equatorial wins key role in Copasa privatization with $1.1 billion bid
About this update from Equatorial S.a.
By Andre RomaniBrazilian power company Equatorial BMFBOVESPA:EQTL3 has secured the strategic investor role in the privatization of water and sewage treatment firm Copasa BMFBOVESPA:CSMG3, committing to buy a 30% stake for 5.59 billion reais ($1.10 billion), both companies said on Wednesday.The government of Minas Gerais, a state located in Brazil's southeastern region, launched a share offering of over $1 billion in May to relinquish control of Copasa, a utility that provides sanitation services to some 12 million people.Equatorial has filed a bid of 49.03 reais per share to take the role of strategic investor in Copasa, 3.8% above the minimum price set by state government, the firms said.Minas Gerais decided to sell a 30% stake in Copasa to a strategic investor, a role which Equatorial has secured with no competition after a consortium formed by sanitation company Aegea and its shareholders — Itausa BMFBOVESPA:ITSA3, Equipav and Singapore's GIC — decided to leave the process.The state government, owner of an equity interest of just over 50% in Copasa, also plans to sell an additional up to 20% of the sanitation firm to broad investors through a second phase of the share offering, which is set to be priced on June 11.Equatorial, which became one of the main shareholders of Sao Paulo's state sanitation company Sabesp BMFBOVESPA:SBSP3 in 2024 after a similar privatization deal, also expressed its intention to buy up to 48 million additional shares of Copasa in that second phase.That could raise Equatorial's stake in Copasa to 42.6% upon the offering's conclusion, and its disbursement in the deal to 7.9 billion reais ($1.6 billion), Equatorial said.Last week, Minas Gerais needed to review the privatization process after a first round of bids from potential strategic investors fell below the government's minimum asking price, a source told Reuters.($1 = 5.0598 reais)