Brazilian power company Equatorial Energia SA is the sole bidder for a major stake in Sabesp, the state’s water utility, which is being privatized in a multibillion-dollar share offering, Bloomberg reports.
Equatorial sent its bid by Wednesday’s deadline to acquire a 15% stake in Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp), according to sources familiar with the matter. Expectations for competitive bids were dashed as a rival proposal from a consortium backed by Singapore’s sovereign wealth fund GIC and Itausa SA did not materialize, the sources said.
The lack of multiple bids poses a challenge for Sao Paulo's right-wing Governor, Tarcisio de Freitas, who has been pushing privatization as a strategy to reduce public debt. The sale can proceed with only one bidder, provided Equatorial’s offer meets the minimum price set by the state government, one source indicated.
The equity deal, supported by financial heavyweights such as Banco BTG Pactual SA, UBS BB Investment Bank, Bank of America Corp., Citigroup Inc., and Banco Itau BBA SA, is anticipated to raise up to 16.8 billion reais ($3.0 billion) at current market levels. This transaction is poised to be Latin America’s largest equity deal in two years, transitioning Sabesp from a state-run enterprise to a privately held company.
Additionally, veteran investor Nelson Tanure had considered participating as a key stakeholder but ultimately decided against it, according to the source.
The privatization of Sabesp marks a crucial move in Governor de Freitas’s agenda, aiming to attract private investment and improve efficiency in the provision of essential public services.
