Model for Sabesp privatization to be decided next week
| Data de publicação | 26 Março 2024 |
The São Paulo government is expected to decide on the model for Sabesp’s privatization process by next week, according to sources. The big challenge at the moment is to select a primary shareholder for the water and waste utility to minimize the chance of pulverizing control of the company in the share offer, something that has been on the table of the legal team involved in the transaction in recent weeks. The company’s offer is one of the most eagerly awaited by the market
Among the alternatives studied, the option considered most likely is to make the offer to the primary shareholder together with the other shareholders, and not in separate processes, as had been analyzed
The idea would be to reserve around 50% of the shares sold by the government for the primary shareholder in the bookbuilding, and allocate the other part to the rest of the market - this 50% proportion could still change. In other words, the idea would be to follow the traditional procedures for a public offering
However, this was not the idea initially put forward, since the search is for a primary shareholder, with around 15% of the shares, something difficult to guarantee in a stock exchange offering. For this reason, the possibility of holding a prior auction was studied, but the idea was dropped. The reading was that there could be questions since the conditions could be different. In addition, one source notes that it would be very complex to manage the two processes simultaneously
Despite the challenge, having a primary shareholder has been seen as essential to the success of the operation. This is because the primary shareholder would be a partner with a long-term vision and the operational experience to lead the necessary transformation in the company’s management. The aim is for it to be a minority shareholder, but to have a slightly larger share, around 15%, as well as the power to appoint people to the board of directors and committees, which in practice gives it management power. The idea stems from an internal assessment that the privatization of Eletrobras, which culminated in a pulverization of control, would not be the best model.
Today, the São Paulo state government holds 50.3% of Sabesp’s shares and, after the operation, intends to keep a slice of around 20%, according to sources - which has been considered a balanced participation, in order to attract the market. On Monday, the stock cost R$80.96, up 7.4% this year.
The privatization will involve both a...
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