Brookfield's sanitation firm BRK Ambiental hires banks for IPO -sources

Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP

23/07/2021 19:50

By Carolina Mandl
    SAO PAULO, July 23 (Reuters) - Canada's Brookfield Asset
Management Inc  BAMa.TO  and Brazil's workers' severance fund
FI-FGTS have hired banks to manage an initial public offering of
sanitation company BRK Ambiental by December, three sources with
knowledge of the matter said.
    Brookfield is the controlling shareholder in BRK, with a 70%
stake in the company, while FI-FGTS, which is managed by Caixa
Economica Federal, has the remaining part.
    The share offering may total roughly 3 billion reais 
($587.95 million), one of the sources said on the condition of
anonymity as discussions are still private.
    BRK Ambiental, Caixa and Brookfield all declined to comment
on the matter.
    Investment banking units of BTG Pactual, Caixa Economica
Federal, Itau Unibanco, Bradesco, Citigroup and Santander will
manage the offering, the sources said.
    The move comes as Brazil's government last year approved a
bill to ensure water and sewage services will be available to
the entire population by 2033, a goal which would cost an
estimated 700 billion reais in new investment to achieve.
    Brookfield acquired a stake in BRK in October 2016 from
construction conglomerate Novonor, formerly Odebrecht SA.
    The listing's main goal is to provide an exit for FI-FGTS,
but the company may also raise proceeds by selling new shares.
    One source told Reuters that, although the company has hired
banks for the IPO, FI-FGTS also launched a dual-track process to
sell its 30% stake in the company through an M&A, aiming at
obtaining the highest possible price for its shares.
    In 2019, Brookfield engaged in talks with FI-FGTS to acquire
its stake in BRK. It is not clear if Brookfield is still
interested. The company declined to comment on the IPO and on
its interest in acquiring a stake in BRK.
 ($1 = 5.1025 reais)

 (Reporting by Carolina Mandl
Editing by Sonya Hepinstall)
 ((carolina.mandl@thomsonreuters.com; +55 11 5644 7703; +55 11
97116-3806;))