Copasa shares surged in the final minutes before the market close on Wednesday, June 3, and ended the session up 13.34% at R$ 60. The rally came after reports from AE News and Valor Econômico that Equatorial made a new bid in the second attempt to privatize Copasa, the Minas Gerais water and sanitation company, competing for the role of reference shareholder. According to the reports, the strategic investor is expected to take a 30% stake in the company. Equatorial shares also rose, though more modestly, closing up 1.89% at R$ 39.81.
The absence of Aegea’s consortium from this new round surprised the market and reinforced expectations that Equatorial is now the likely winner of this stage of the process. A follow-on offering is still scheduled for Friday, June 5, when the shares will be offered to the market.
Copasa’s privatization has become a focus of investor scrutiny, with the market closely tracking the terms of the transaction. In a recent report, Genial Investimentos said it remained constructive on the privatization thesis, but noted that pricing had become the main concern. The brokerage said Copasa has regulatory characteristics that could support a rerating, including a post-tax regulatory weighted average cost of capital that is higher than Sabesp’s and a faster expected expansion of the regulated asset base through 2030. These factors, in Genial’s view, justify some premium relative to its main peer.
Even so, Genial said the market has already priced in much of that potential upside. The firm noted that Copasa trades at about 1.51 times its expected 2026 enterprise value to regulated asset base, compared with 1.05 times for Sabesp, even before the privatization is completed and before a new controlling shareholder is defined. It also highlighted the normal execution risks involved in turning around a company that has historically been state-owned.
While Genial acknowledged that Copasa’s stronger regulatory return profile and higher expected asset growth are positive factors, it argued that applying the full premium would be excessive. The report cited several unresolved issues, including investment execution, tariff recognition, financing, corporate governance, and the speed at which efficiency gains can be captured. It also emphasized that the identity of the reference shareholder is still not known.
The sharp move in Copasa’s stock reflects growing investor interest in the privatization process and renewed optimism around the company’s restructuring potential, but it also shows that the market is increasingly sensitive to valuation and deal execution risks as the transaction advances.
