Equatorial Becomes Reference Shareholder in Copasa After 30% Purchase

Overview

• Equatorial paid about R$5.6 billion to acquire a 30% stake in Copasa and confirmed its position as a reference shareholder, completing the transfer of control announced on Tuesday.
• The company financed the move alongside an R$8.4 billion follow-on that was heavily oversubscribed, with demand topping R$70 billion, and Equatorial sought but did not receive extra allocation in the placement.
• S&P National Ratings reiterated Equatorial’s national brAAA grade and said the Copasa purchase will push leverage toward roughly five times by end-2026, with gradual deleveraging to about 4.5 times in 2027.
• Analysts expect Equatorial to apply the margin-improvement measures used at Sabesp—staff optimization, migration to the free energy market, and stricter delinquency control—to lift Copasa’s profitability while the energy distribution arm supplies near-term cash.
• The privatization reduces Minas Gerais’s stake to 5% and imposes multi-year lock-ups on sold shares; the deal aims to speed sanitation investments and expand access but will require further fundraising and large capital spending that could affect consumers and public finances.