Companhia de Saneamento de Minas Gerais

What it is

COPASA was created in 1963 by the State of Minas Gerais to bring water and sewage services to the state’s municipalities; it grew through mergers and took its current name in 1974. Today it is one of Brazil’s largest state water utilities, holding the concession to supply treated water and collect sewage across the fourth most-populous state in the country.

As of 2024 COPASA was responsible for water supply in 640 of Minas Gerais’s 853 municipalities, serving roughly 11.9 million people, and for sewage collection in 309 municipalities, with more than 33,000 km of pipe and 305 treatment stations. Its shares trade on B3’s Novo Mercado segment — the exchange’s highest tier of corporate governance — under the ticker CSMG3.

Who owns it

The State of Minas Gerais is the controlling shareholder, accounting for roughly 50% of the capital — the EODHD structured data records insiders (i.e., the state) at 50.03% and institutional investors at a further 34.8%, leaving a public free float of about 15%. A secondary offering some years ago saw the municipality of Belo Horizonte, then the second-largest shareholder, exit entirely, while Minas Gerais sold part but retained control.

The state is now running a privatisation process structured as a secondary share offering — meaning the proceeds go to Minas Gerais, not to COPASA — designed to transfer roughly 30% of COPASA’s capital to a reference investor. A consortium linked to Aegea, backed by Equipav, Itaúsa and Singapore’s sovereign fund GIC, and a separate bid reportedly led by Equatorial were both submitted but fell short of the government’s price floor.

Who runs it

Fernando Passalio de Avelar was approved as CEO by the board in February 2025, though he was replaced as CEO later that same year, in December 2025. The identity of the current CEO appointed after that change was not confirmed in available primary sources at time of writing.

The CFO and Investor Relations Officer has a background that includes the role of CFO and IR at Companhia Paranaense de Energia (Copel) from 2017 to 2024, and previously Vice President of Finance and Investor Relations at Electrolux Latin America from 2003 to 2017. COPASA’s tariffs — the prices it charges customers — are set by Arsae-MG, the Minas Gerais state water and sewage regulatory agency, not by the company itself.

The money, in plain words

Sales have grown steadily: revenue rose from R$7.40bn (US$1.43bn) in 2023 to R$8.33bn (US$1.61bn) in 2025, a gain of 12.5% over two years (our calculation). The company keeps about 16 cents of profit from every real of sales — a net profit margin of 16.1%, solid for a regulated utility where prices are set by a government regulator.

For every real that owners have put in, COPASA earns back about 16 cents a year — a return on equity of 15.9%, respectable given the regulatory constraints on pricing. The balance sheet carries R$7.25bn (US$1.40bn) in net debt — total borrowings of R$7.75bn (US$1.5 bn) minus R$504m (US$98 mn) in cash (our calculation) — which is elevated but typical for an infrastructure company that must build and maintain thousands of kilometres of pipe.

The shares trade at 17.5 times earnings (P/E of 17.5×), pricing in both the utility’s defensive income and the privatisation optionality.

What it is doing now

The government of Minas Gerais set a public floor price of R$47.23 (US$9)per share for the sale of its stake — the minimum at which the transaction can proceed. The revised timetable was tight: a retail reservation period opened June 5, pricing was scheduled for June 11, and settlement for June 16, 2026.

In November 2025, Minas Gerais passed a constitutional amendment removing the requirement for a public referendum before the privatisation could proceed; the state will retain a golden share — a special veto right over strategic decisions — after the sale. Proceeds from the privatisation are earmarked to pay down Minas Gerais’s debt with the federal government or to meet obligations under the state debt restructuring programme (Propag).

What to watch

• Privatisation outcome. Whether the state clears its R$47.23 (US$9)floor price and finds sufficient demand is the single biggest event overhanging the stock. A failed sale leaves the status quo; a successful one reshapes the company’s governance, investment pace, and dividend policy overnight.
• Tariff reviews. COPASA’s revenue depends on tariffs approved by Arsae-MG. Any periodic review that delivers below-inflation increases would squeeze the margin directly.
• Universalisation targets. Under Brazil’s new sanitation framework, whichever entity controls COPASA after privatisation must meet mandatory water and sewage coverage targets, including rural areas and informal urban settlements. Capital spending will be high regardless of who owns the pipes.
• Leverage. Net debt at roughly 87% of equity (our calculation) leaves limited financial headroom; the cost of that debt and any refinancing terms will matter as Brazil’s interest rates evolve.

This is news, not investment advice.