Investor demand strong for Brazil water firm Sabesp

Brazil's largest water firm, São Paulo state-controlled Sabesp, enjoys sufficient demand from investors to complete the second and decisive step in its privatization.

Sabesp is being privatized in two phases, with the state planning to reduce its holding from 50.3% to 18.3%.

The first step was concluded recently when local utility Equatorial Energia agreed to acquire a 15% stake for 6.9bn reais (US$1.26bn). 

This week Sabesp seeks to complete the second phase of the process by offering a 17% stake on the stock market. 

In this second phase, based on the price of the rest of Sabesp’s shares that are already listed, the state government is looking to raise 7.9bn reais while demand from investors during the book building process has reached almost 10 times that amount, according to a person with knowledge of the operation consulted by BNamericas.

The details of the operation are likely to be officially announced in the coming days, according to the source, who asked not to be identified.

Once the sale has been completed, approval of antitrust body Cade will be required and the privatization is expected to be concluded in the next few months. Then a new board will be elected.

Sabesp plans to invest up to 68bn reais through 2029, it announced recently.

The sale has been closely followed by both investors and water service companies as the utility will no longer have to follow as many bureaucratic processes for contracting as happens with state-owned firms.