Business
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 Romani Brazilian 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)