Canada’s Brookfield unit among sanitation companies seeking Brazil IPOs

By Tatiana Bautzer

SAO PAULO (Reuters) – Two sanitation companies are expected to break Brazil’s IPO drought in the coming months.

The sector has been buoyed by Brazil’s decision to update the regulatory framework for private investment in water and sanitation services in 2020, but IPOs across the world have been slowed by market volatility.

Canada’s Brookfield Asset Management’s sanitation subsidiary in Brazil, BRK Ambiental, is seeking an IPO to finance its expansion, according to a preliminary prospectus filed with securities regulator CVM.

State-controlled Cia Riograndense de Saneamento, known as Corsan, expects to resume its planned IPO next month, filings show.

BRK Ambiental is the second largest private sanitation company in Brazil. Brookfield has a 70% stake in it that it acquired from Brazilian construction conglomerate Novonor, formerly known as Odebrecht.

The company’s planned primary share offering will be managed by the investment banking units of Banco BTG Pactual SA, Itau Unibanco Holding SA, Caixa Economica Federal, Banco Santander Brasil SA, Banco Bradesco SA and Citigroup.

It could raise up to 3 billion reais ($623 million) in the offering, sources told Reuters when the company began considering the offering last year.

Corsan, controlled by the southern state of Rio Grande do Sul, had filed for its IPO in December, but suspended the process because of market volatility. It decided this week to resume the process next month. The Rio Grande do Sul government has already said publicly it wants to raise around 1.5 billion reais.

Among the deals triggered by Brazil’s 2020 regulatory change, Canadian pension fund CPPIB acquired a 45% stake in Igua Saneamento for 1.1 billion reais last year.

The state of Rio de Janeiro privatized its sanitation company Cedae a year ago, raising 22.7 billion reais, equivalent to $4.2 billion at the time.

($1 = 4.8151 reais)

(Reporting by Tatiana Bautzer; editing by Jason Neely and Barbara Lewis)