08/25/2024 – 18:15
Carlos Piani, chairman of the board of Grupo Equatorial, will be appointed CEO of Sabesp this week, according to sources familiar with the move. The group became the reference shareholder of the São Paulo sanitation company, with the purchase of 15% of its shares for R$6.9 billion last month. Now, it will appoint Piani, whose appointment had been anticipated by Estadão/Broadcast. The name still needs to be approved at a meeting of Sabesp’s board and shareholders, but its approval is unlikely to face any resistance. He is expected to take office in October.
In addition to chairing the group’s board, Piani is a member of five other boards, including Vibra Energia, Ambipar and Hapvida. At 51, he was president of the construction company PDG Realty and Kraft Heinz in Canada, in addition to having been a partner in the asset management company Vinci Partners. He was also head of the Maranhão-based distributor Cemar (Equatorial Energia Maranhão), where he managed to universalize the system’s coverage, with the support of the Luz para Todos program.
Piani will take over the São Paulo giant that serves 28.1 million people in 371 municipalities in a race against time: the goal of universal sanitation was brought forward from 2033 to 2029 by the state government, in the privatization process. This means including in the Sabesp system the approximately 20% of the population – in addition to these 28 million inhabitants – who do not have access to water or sanitation services (or both).
To achieve this, it is estimated that the company will need around R$70 billion in the period, which should come from the company’s cash generation, as well as from market funding and productivity gains in the company. Sabesp had revenues of R$40 billion in 2023, with consolidated profits of R$2.8 billion. There are strict rules for the distribution of dividends during this period, which will fall if the universalization goals are not met.
In addition to having mapped out the fronts that need to be tackled most urgently, in work carried out in recent months by the Equatorial Group itself, the idea is to count on Sabesp’s own technical staff, considered highly qualified by the new controller. There will also be productivity gains with the acceleration and implementation of processes, as well as improvements in the selection of suppliers and systems, which were previously done through bidding processes and did not always result in the selection of the best names, due to this restriction.
Team will be maintained
No staff cuts or voluntary redundancy plans (PDV) are planned initially. Quite the opposite. Without holding public tenders for more than ten years, Sabesp is suffering from a staff shortage. Due to the lack of public tenders, it also has a large number of outsourced suppliers, who must be incorporated into the company’s staff.
The fact that Grupo Equatorial is one of the largest investors among publicly traded companies, with R$11 billion allocated to the growth of operations last year, is considered an advantage given its history of this type of decision-making.
The sanitation sector, however, is in an investment phase prior to the energy sector, in which Equatorial originated. Therefore, the heavy spending at Sabesp at this early stage tends to have a return in the longer term, when universalization should add around 4 million consumers to its customer base.
Similar process
During his time at Banco Pactual in the early 2000s, Piani participated in the creation of the holding company Equatorial Energia and in the structuring of the investment in Cemar, which he led between 2006 and 2010. From a distributor under intervention by the National Electric Energy Agency (Aneel) and on the verge of bankruptcy, Cemar transformed into a successful operation. In Aneel’s ranking, Equatorial Maranhão was one of the companies that improved the most, rising six positions in customer service.
This experience could be essential to avoid situations like the one that occurred with Enel in São Paulo, after the blackouts that left hundreds of thousands of people without power for weeks last year. The idea is to prioritize those who do not receive service today, whether in urban or rural areas or with illegal connections.
The list includes residents of the Ribeira Valley and coastal regions. The concessionaire will also be required to serve customers in rural areas after three years of operation, which creates an additional challenge that does not currently exist for the operation. It also involves redoubling the attention given to those who are already served today.
The fact that the state government has a stake in the sanitation company is considered essential, especially for the reduction of illegal connections, as well as for the care of operations in water sources, since the company will need to rely on the government for this regularization. Another area in which this partnership should be strengthened is in the areas of environmental emergencies, which are expected to become more acute with the trend towards greater water scarcity in the state of São Paulo.
Considered to be the CEO of Vale and Vibra, Piani began working in the financial market in 1998, as an analyst at the investment bank Pactual. His initial plan, however, was different: to spread the name of Brazil around the world through judo.
He even dropped out of college to travel with the Brazilian junior team, with the dream of an Olympics or a World Championship. He ended up leaving the sport a year and a half later, when he realized that he was a good judoka, but not good enough to be in the select group of those who would win a medal.
After running Kraft Heinz in Canada, Piani returned to Brazil in 2020. With two partners, he set up HPX, a “blank check company” that merged with Response, part of the Ambipar Group. He also invested money and became head of Modular Data Centers, which builds modular components for data centers. (Elisa Calmon contributed to this).
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