(Bloomberg) -- Brazilian power company Equatorial Energia SA emerged as the sole bidder to buy a key stake in Sabesp, the water utility that’s being privatized by Sao Paulo state in a multibillion-dollar share offering.

Equatorial submitted a proposal by Wednesday’s deadline to buy a 15% stake in Cia. de Saneamento Basico do Estado de Sao Paulo, as the Brazil company is formally known, according to people with knowledge of the matter. A rival bid from a private utility backed by Singapore sovereign wealth fund GIC and Itausa SA, failed to materialize, said the people, asking not to be identified discussing private information.

Aegea declined to comment. Equatorial, Sabesp and Sao Paulo’s government didn’t immediately reply to messages seeking comment. 

Shares of Equatorial jumped as much as 6.2% in Sao Paulo on Thursday — their biggest intraday gain in a year. Sabesp’s stock, on the other hand, dipped 4.1%.

The lack of competition for an anchor stake in the water utility is a setback for right-wing Sao Paulo Governor Tarcisio de Freitas, who has vowed to privatize companies to reduce public debt. The deal can go forward even with one bidder, but only if Equatorial’s offer reaches the minimum price desired by Sao Paulo’s government, one of the people said. 

Under the privatization plan, general investors are expected to be able to snap up an additional 17% interest in Sabesp through a share sale that’s expected to price on July 18. The price proposed by Equatorial is expected to be released by the government on Friday. 

Sabesp is working with Banco BTG Pactual SA, UBS BB Investment Bank, Bank of America Corp., Citigroup Inc. and Banco Itau BBA SA on the equity deal. Bradesco BBI, Goldman Sachs Group Inc., JPMorgan Chase & Co., J. Safra, Morgan Stanley, Santander and XP Inc. are the joint bookrunners.

The equity deal, which is fully secondary and could raise as much as 16.8 billion reais ($3.0 billion) based on current levels, is shaping up to be Latin America’s biggest in two years. Following the offering, Sabesp will no longer be a state-run Brazilian enterprise.

Veteran Brazilian investor Nelson Tanure also considered being an anchor for the transaction, but ended up giving up the plan, the person said. 

--With assistance from Vinícius Andrade, Barbara Nascimento, Felipe Saturnino and Leda Alvim.

(Updates with share move in fourth paragraph.)

©2024 Bloomberg L.P.