By Brazil Stock Guide – Copasa (B3: CSMG3) agreed to pay R$ 60 million ($11 million) to the Minas Gerais state audit court after the completion of its privatization process, according to a settlement approved in May as the state-controlled water utility advances toward a share sale.
The payment is part of an agreement between Copasa and the Minas Gerais Municipalities Association, Folha de S.Paulo reported. The Minas Gerais audit court, known as TCE-MG, is overseeing the next stages of the company’s follow-on share offering and is responsible for reviewing potential challenges to the privatization.
The settlement, known in Brazil as an autocomposition agreement, was approved by the full court on May 13. Five days later, on May 18, TCE-MG councilors unanimously cleared the privatization process to proceed, authorizing the offering of shares to the market. The decision was considered the final legal step before the transaction moved forward.
Under the agreement, Copasa must transfer the R$ 60 million to TCE-MG within 30 days after the company notifies the market that the privatization offering has been completed. The funds will go to FuncontasTCEMG, a court fund used to finance measures to improve, modernize and strengthen audit activities.
The agreement also allows sewage services to be added to contracts in 273 municipalities that are currently served by Copasa only for water supply. The provision affects cities already linked to the utility, but without sewage services included in their contracts.
TCE-MG told Folha that the fund is designed to improve the court’s institutional functions, finance operations and modernize services. The court said the mechanism is similar to funds used by Brazil’s public prosecutors and state courts.
“Resources from contracts, agreements and similar instruments, such as agreements signed within the scope of conciliation and conflict-prevention panels established by Resolution No. 01/2025, may be allocated to this specific fund,” TCE-MG said.
Copasa said the settlement was approved by its corporate bodies and disclosed to the market through its reference form.
Two infrastructure regulation specialists interviewed by Folha on condition of anonymity said they had never seen a similar clause in this type of settlement. They said the provision resembled a proposal made by the Lava Jato task force in Paraná to create a fund to finance citizenship and anti-corruption projects with money recovered from Petrobras (B3: PETR4; NYSE: PBR). In Copasa’s case, however, there is no allegation of damage, corruption or wrongdoing.
Equatorial Energia (B3: EQTL3) was the only company to submit a proposal to become Copasa’s reference investor, the utility said on Wednesday (3). The group offered 49.03 reais per share in a R$ 5.5 billion transaction to acquire 30% of the company.
On Friday (5), the Minas Gerais government began the bookbuilding phase of the market offering, in which investors indicate how many shares they intend to buy. Another 15% of the company is expected to be distributed at this stage.
Settlement of the shares is scheduled for Thursday (11). If the final market price is higher than the amount offered by Equatorial per share, the full 45% stake will be placed through the stock exchange, and the strategic investor will be disqualified.
The Minas Gerais government says proceeds from the privatization offering, estimated at about R$ 10 billion, will be used to meet infrastructure investment obligations under Propag, a federal program for renegotiating the state’s debt with the Union.
Founded in 1963, Copasa reported net income of R$ 1.42 billion in 2025. The company has 9,400 employees and serves 636 municipalities in Minas Gerais.