According to Bloomberg, Equatorial, a Brazilian power company, has submitted a proposal to acquire a 15% stake in Cia. de Saneamento Basico do Estado de Sao Paulo, commonly known as Sabesp. The information was revealed by individuals familiar with the matter who requested anonymity due to the private nature of the information. Aegea Saneamento e Participacoes SA, a private utility backed by Singapore's sovereign wealth fund GIC and Itausa SA, had considered placing a bid but ultimately decided against it. No comments were available from Aegea, Equatorial, Sabesp, or the Sao Paulo government at the time of reporting.
The lack of competition for the anchor stake in the water utility is seen as a setback for the right-wing Sao Paulo Governor. Under the privatization plan, general investors are expected to have the opportunity to acquire an additional 17% interest in Sabesp through a share sale scheduled for July 18. The price proposed by Equatorial is expected to be announced by the government on Friday.
The equity deal, which is fully secondary, could raise as much as 16.8 billion reais ($3.0 billion) based on current levels. This makes it potentially the largest in Latin America in two years. Following the offering, Sabesp will no longer be a state-run Brazilian enterprise.