Aegea considers IPO in Brazil to support expansion in sanitation sector
Aegea, one of the largest sanitation companies in Brazil, plans to sell shares on the capital market as a strategy to finance its continued expansion.
The company, currently controlled by the Equipav group (53%), the Singapore sovereign fund GIC (34%), and the holding company Itaúsa (13%), reported that it is in the process of hiring banks to carry out an initial public offering of shares, an operation known as an IPO, although it has not yet set a date for the transaction.
“Considering Aegea’s growth in recent years and the future opportunities in the sanitation sector, the company is evaluating the possibility of carrying out an initial public offering of shares and, to this end, has begun the process of engaging financial and legal advisors to carry out preparatory work for determining the feasibility, terms, and structure of the potential offering,” the company said in a statement.
Currently, Aegea is present in 892 cities across 15 Brazilian states, serving more than 39 million people.
In recent years, the company has recorded an aggressive expansion with the acquisition of new privatization, concession, and public-private partnership (PPP) contracts offered in Brazil.
These contracts stem from regulations approved in 2020, which required states and municipalities to achieve universal access to water and sewage services by 2033, under penalty of being barred from accessing federal government funds.
In addition to Aegea, recently BRK Ambiental filed a registration request with the Securities and Exchange Commission of Brazil (CVM) to carry out a share offering.
Brookfield Business Partners holds 70% of BRK, while FI-FGTS, an investment fund managed by the state-owned bank Caixa Econômica Federal, controls the remainder. BRK is present in 13 states and in more than 100 municipalities, operating through concession contracts and PPPs.
The planned share offerings by sanitation companies contrast with a prolonged period of timid activity by Brazilian companies in the equities market, amid an environment of persistently high interest rates.
“I see the planned share offering operations of sanitation companies as a one-off factor, specific to the sanitation sector, which requires high capitalization of the companies at this moment to meet new contracts. The completion of the share sale of these companies is not likely to be significantly replicated in other segments, since interest rate conditions in Brazil will still be quite restrictive throughout 2026,” Alexandre Pierantoni, head of the corporate finance and M&A division at Kroll, told BNamericas.
Currently, the basic interest rate in Brazil, the Selic, is at 15% per year, and economists project that the rate should enter a downward trajectory over the course of 2026, with the easing of inflation.
“The market today is talking about a [Selic] rate of around 13.5%, which already represents a reduction. Each half point is important, but for capital markets activity what really helps is moving from a level of 15% to something between 8% and 9%. Even with the projected drop, the interest rate level will still be restrictive,” said Pierantoni.
(The original version of this content was written in Portuguese)
