By Brazil Stock Guide – Equatorial has moved to the front of the line in the privatization of Copasa, confirming a strategic push that had been signaled months ago. But it has not yet won the race.
The company said its wholly owned subsidiary, Gerais Saneamento, was named the finalist reference investor in the secondary offering of Copasa shares held by the State of Minas Gerais. The bid was set at R$49.03 per share, above the R$47.23 minimum price defined for the transaction.
That implies a premium of R$1.80 per share, or about 3.8% over the floor. For the priority stake equivalent to 30% of Copasa’s capital, the investment would be around R$5.6 billion. If Equatorial also receives additional institutional shares equivalent to roughly 12.6% of the company, the total commitment could rise to about R$7.9 billion.
The first round
The process was not always a one-bidder story.
In late May, Aegea submitted a proposal through a consortium led by its shareholders — Equipav, Singapore’s sovereign wealth fund GIC, and Itaúsa. Equatorial also made an offer at that stage.
But Minas Gerais suspended the process after the bids came below the minimum price set by the state — a floor that had not been disclosed to the bidders. When the transaction resumed, Aegea chose not to present a binding offer. Equatorial did.
That made Equatorial the only strategic investor willing to move forward under the new price discipline.
Market test
Still, Equatorial’s position is not guaranteed.
The next step is the bookbuilding process, in which investors will indicate how many Copasa shares they want to buy and at what price. This stage will offer an additional 15% stake in the company to the broader market and is expected to begin on Friday, June 5. Settlement is scheduled for June 11.
If the bookbuilding ends with a price above Equatorial’s R$49.03-per-share bid, the structure changes. The entire 45% stake held by Minas Gerais would be distributed through the stock market, the strategic investor would be disqualified, and Copasa’s privatization would be concluded as a corporation — without a defined controlling shareholder.
In other words, Equatorial is in pole position. But the market still has the final word.
A prepared move
The bid also gives new weight to a thesis Brazil Stock Guide raised in March: Equatorial was not cutting dividends because it had run out of ambition. It was preparing for the next large acquisition.
At the time, the company’s proposal to reduce its mandatory dividend payout from 25% to 1% looked uncomfortable for yield investors. But the rationale was explicit: preserve cash, increase financial flexibility and create room for new deals. Brazil Stock Guide argued then that Copasa was a natural candidate within that strategy, given its scale, its proximity to Sabesp and the broader opening of Brazil’s sanitation sector. Three months later, that optionality has a name: Copasa.
Equatorial’s bid suggests the dividend cut was less a defensive measure than a capital-allocation signal. The company was not simply saving cash. It was preparing to move quickly when a large sanitation asset came to market.
Sanitation platform
For Equatorial, Copasa would deepen a strategic push into sanitation.
The company is already a shareholder in Sabesp, the water utility privatized by the São Paulo state government in 2024. A successful Copasa deal would give Equatorial exposure to another large state sanitation company and strengthen its position as a broader infrastructure platform, beyond its traditional electricity-distribution business.
Sanitation today resembles power distribution a decade ago: fragmented, political and full of operational inefficiencies. That is precisely the type of environment where Equatorial built its edge.
The potential investment also matches the scale of the financial structure Equatorial had prepared. A previous filing revealed a bank-guarantee framework of up to R$7 billion, signaling that the company was preparing for a serious move in the Copasa process.
Perfin factor
Even if Equatorial secures the reference-investor position, the governance story will not end there.
One of the key players is Perfin, the investment firm that already owns roughly 15% of Copasa and has continued to increase its position in the market. Perfin was one of the strongest supporters of the privatization process and is expected to remain a relevant shareholder regardless of the final structure of the transaction.
That means Equatorial’s challenge goes beyond winning the auction. If it becomes the anchor investor, it will need to build alignment with existing large shareholders, especially Perfin, whose stake makes it one of the most influential investors in Copasa’s future governance.
If the transaction ends as a corporation instead, Perfin could emerge even stronger: an early investor in the privatization thesis, already positioned before the broader market repricing.
For Minas Gerais, the transaction now has two possible endings. If the market does not beat Equatorial’s price, the state gets a strategic investor willing to pay almost R$8 billion for a large stake in Copasa. If investors offer more, the state may sell the full block through the market and create a widely held sanitation corporation.
Either way, Copasa’s privatization has entered its decisive week.