Copasa highlights growth potential in privatization roadshow

Copasa highlighted growth potential, regulatory advances and operational efficiency gains during the share offering roadshow that could raise up to R$10 billion. In the presentation to investors, the company stated that privatization could serve as a catalyst for governance improvements, discipline in capital allocation and structural expansion of margins.

Among the main points of the investment thesis, the company highlighted the third tariff review, which increased the adjustment to 6.56% and began to provide for mechanisms such as annual incorporation of investments into the regulatory base and recognition of interest during the construction of assets. The changes increase the predictability of returns and strengthen incentives for expanding services, according to the company.

Copasa also highlighted the sanitation regionalization process in Minas Gerais and the renewal of the Belo Horizonte concession until 2073 as factors that increase the visibility of long-term cash flows. The company states that another 21 municipalities have already signed contractual amendments.

The roadshow also highlights that Minas Gerais continues to offer space for expansion of sanitation. Copasa already serves more than 99% of the population with water supply, but sewage coverage is still at 80.4%, compared to a regulatory target of 90% by 2033. The company assesses that progress in universalization should support the expansion of investments and the regulatory asset base in the coming years.

The presentation details the expected corporate structure after privatization. Based on the operation's modeling, the reference investor will retain up to 30% of the company's share capital, while approximately 64.6% of the shares will remain in circulation on the market.

The State of Minas Gerais must maintain a residual stake of 5%, in addition to the golden share, preserving specific prerogatives provided for in legislation and bylaws.

The offer foresees the initial sale of 171.1 million shares held by the State of Minas Gerais, in an operation estimated at around R$9 billion. The modeling reserves up to 30% of the share capital for a reference investor, a stake valued at approximately R$6 billion, while another 15% will be allocated to the market. With the full placement of additional shares, the financial volume could reach around R$10 billion.

Schedule

Proposals from those interested in acting as a reference investor may be presented between May 21st and 25th. The name of the selected candidate will be announced on May 27th.

The offer to the market will begin on May 28th, while bookbuilding will continue until June 1st. Pricing is scheduled for June 2nd and financial settlement for June 8th.

Source: CNN