06/28/2024 – 20:53
Only one company, Equatorial Participações e Investimentos, has submitted a proposal to take on the role of reference investor in the privatization process of the São Paulo Basic Sanitation Company of the State of São Paulo (Sabesp), the largest sanitation company in the country. The reference investor will have 15% of the company’s shares.
Equatorial proposed investing approximately R$6.9 billion for the 15% of Sabesp shares. The price for each share offered by Equatorial was R$67 – below the current value of Sabesp shares (approximately R$75), but above the minimum price stipulated by the state government in the privatization contracts, which has not yet been made public.
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In a press conference held in London, the governor of São Paulo, Tarcísio de Freitas, was asked about the price offered by the only interested company, which was below market value. According to Tarcísio, the current value of Sabesp shares cannot be considered as a parameter in this process, but rather “the trajectory of the stock price in recent months”.
“We cannot take today’s screen value and forget the trajectory of the value of these shares. Let’s remember how these shares were at the beginning of last year, when we started this process, what the level of shares were in May of last year and where we are today”, he said at the press conference. In May 2023, the value of Sabesp shares was around R$50.
The Secretary of Environment, Infrastructure and Logistics of the state of São Paulo, who coordinates the company’s privatization process, Natália Resende, said that the interest of just one company for the position of reference investor in Sabesp was “as expected”.
“Everything is as expected and that is why we are satisfied with the project as a whole, whether in terms of the budget, or the presence of the finalist, the reference shareholder, who will help us, after everything is done, with the minimum condition as long as it is achieved, to have the best management, to have better governance and to have better sanitation for the State of São Paulo”, he said.
Conditions
To assume the position of Sabesp’s reference investor, conditions established in the Investment Agreement are required, which provides, for example, that the company’s Board of Directors will have nine members, with three nominations from the São Paulo government, three from the reference investor and three independent members.
The reference investor will not be able to sell its shares until December 2029, when investments to universalize sanitation in the state are expected to be completed. According to the Investment Agreement, the reference investor will be prohibited from participating in other projects competing with Sabesp in municipalities in São Paulo through other companies in which it is a partner. In other states, the agreement determines that Sabesp will have priority to compete when they involve municipalities or regional arrangements with more than 50,000 inhabitants.
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