Brazil's Copasa, the state sanitation utility of Minas Gerais, secured approval on Monday from the state public spending watchdog, TCE-MG, to launch the share offering tied to its privatization. The clearance removes the main hurdle that had delayed the process for several weeks after the regulator authorized only preliminary steps in April.
With the approval, Copasa is expected to publish its prospectus this week, and pricing of the follow-on offering is anticipated in mid-June. The TCE-MG's plenary approved the authorization unanimously, but counselor Agostinho Patrus said the regulator may suspend the process at any time and required Copasa to report any developments within 48 hours.
In a statement, Copasa noted that the TCE-MG approval represents only one step toward the privatization, which still depends on shareholder and creditor approvals as well as market conditions.
With the approval, Copasa is expected to publish its prospectus this week, and pricing of the follow-on offering is anticipated in mid-June
The utility has already completed preliminary registration for prospective primary shareholders and received applications from Aegea and Sabesp, according to earlier reporting by Valor. Neither registration constitutes a binding bid. Industry expectations point to competition between the two, though appetite remains uncertain. During Sabesp's own privatization, Aegea registered but did not submit a final bid, and Equatorial ultimately became the primary shareholder.
If Aegea were to win the auction, shareholders led by Itaúsa and GIC are expected to inject roughly $1 billion in capital, according to various sources. The group recently shelved a planned 2026 IPO until 2027 to first reduce leverage, and in February completed a R$1.2 billion capital increase that served partly as a pricing benchmark for the Copasa bid.
Sabesp is expected to participate alongside Equatorial, its own primary shareholder. Sources close to the group described the Copasa transaction as relatively small compared with Sabesp's size and indicated interest in acquiring more than the initial 30% stake.
The privatization is structured in two phases. In the first, prospective reference shareholders bid for 30% of Copasa. In the second, at least another 15% will be offered to the broader market, with reference-shareholder candidates allowed to buy more. If the second-phase market price exceeds the strategic bidders' price, Copasa could become a dispersed-ownership corporation, a scenario in which the Minas Gerais state government, which currently holds 50.03%, could fully exit.
Copasa shares closed Monday at R$53.50, up 3.48% from the previous session.
