Brazilian investment firm IG4 Capital, which this week announced the sale of its stake in local water company Iguá Saneamento, is eyeing a bigger prize — the state of São Paulo’s soon-to-be-privatized water utility Sabesp.
“We are raising funds to try to become one of the reference shareholders in the privatization of Sabesp,” Paulo Mattos, head of IG Capital, told LatinFinance on Wednesday. “We are very interested.”
Mattos said that IG4, along with New York-based investment company Water Asset Management, is trying to raise $1 billion to invest in Sabesp, which he described as “a turnaround case.”
“There is a very large opportunity to buy and improve,” Mattos said. “There is an opportunity for a management shock to improve operations and create value… There will be a need for BRL70 billion ($13.7 billion) of capex in five years to extend water services for all.”
This comes after IG4’s sale of a 3% stake in local water and sanitation company Iguá Saneamento to the utility’s two largest shareholders: Canadian Pension Plan Investment Board and Alberta Investment Management Corporation.
“Our work has been done after seven years of turnaround,” Mattos said. “The funding of the company’s investment has been sorted out.”
Iguá issued BRL3.8 billion worth of infrastructure debentures last year supported by Brazilian development bank BNDES and recently sold another BRL2.7 billion, he said.