Sabesp Exits Race for Copasa Privatization

Overview

• Sources say Sabesp has decided not to participate in the Copasa privatization, a move that effectively rules out its controller Equatorial from the contest.
• Aegea remains the main potential bidder and its CEO says the company is still studying participation while seeking additional funding to cover its high debt load.
• Aegea received a R$1.2 billion recapitalization from anchor shareholders in March and Bloomberg has reported those investors may provide up to US$1 billion more for acquisitions.
• The Copasa sale will name a reference shareholder before publishing the offer price, with proposals currently being received under the state's timetable.
• Copasa serves 637 municipalities and about 11.9 million people, so the privatization is expected to reshape Brazil's sanitation sector and affect service planning and investment in Minas Gerais.