Copasa privatization spurs market upgrades and new financing plans

The state‑owned water and sewage firm Copasa was privatized on 16 June, with Equatorial acquiring a 30 % stake for about R$ 8.4 billion. The deal reduced Minas Gerais' public ownership to 5 % but retained a veto on strategic decisions.

Following the sale, analysts lifted price targets: Citi raised its target to R$ 79 from R$ 55, while XP raised Copasa’s 2027 target to R$ 88.3 and set an EQTL3 target of R$ 61.7. XP highlighted Copasa’s internal rate of return of 12.1 % and a projected dividend yield near 13 %, and noted that Equatorial’s involvement should add operational clarity similar to the Sabesp turnaround. For Equatorial, XP sees a historic discount, with an implied real IRR of 12.7 % (about 14 % excluding its stakes in Sabesp and Copasa).

In Minas Gerais, consumer groups warned about tariff impacts, the future of the low‑income subsidiary Copanor, and the need to extend service contracts to 2073. Copasa responded that the debenture program—approval of up to R$ 1.2 billion in two‑year non‑convertible bonds—will fund its investment programme, capital‑raising and working‑capital needs. The market view remains cautiously optimistic about the company’s growth and dividend potential post‑privatization.