By Brazil Stock Guide – Sabesp (SBSP3 BZ) confirmed it is evaluating a potential investment in Copasa (CSMG3 BZ) as part of its expansion strategy, but said progress depends on regulatory clarity and the structure of the privatization process.
President Carlos Piani said the Minas Gerais-based utility fits the company’s focus on large-scale opportunities. “When we look at inorganic opportunities, we try to focus on large deals, and Copasa is the second-largest listed sanitation company in the country,” he said during an earnings call.
Still, Piani cautioned that decision-making around the process has been slower than expected. A key issue is the concession agreement for Belo Horizonte, which accounts for roughly 40% of Copasa’s revenue. “The definition of the Belo Horizonte contract will be critical for the evaluation of the business,” he said.
Another decisive factor is the design of the bidding process. According to Piani, the structure could favor either financial markets or strategic investors, directly influencing Sabesp’s level of interest. “The model may favor the market more or strategic investors, so this is a factor that will impact our interest,” he added.
Sabesp said it will only move forward once there is greater visibility on both the regulatory framework and the auction model.
In São Paulo, the company continues to pursue smaller-scale opportunities aimed at strengthening its presence in adjacent areas. It is also monitoring initiatives such as the Universaliza SP program, which targets municipalities not currently served by Sabesp. “If the project moves forward, we will be ready to assess this opportunity and I believe we will be competitive,” Piani said.