Sabesp Takes Control of EMAE in R$1.13 Billion Deal, Strengthening São Paulo’s Water Security Plan

Privatized utility expands into power and integrates Billings and Guarapiranga systems after Nelson Tanure-linked debt default.

Oct 5, 2025 11:21 AM

By Brazil Stock Guide – Companhia de Saneamento Básico do Estado de São Paulo (Sabesp) (B3: SBSP3) said on Sunday it will acquire control of Empresa Metropolitana de Águas e Energia (EMAE) for R$1.13 billion (US$208 million), reinforcing São Paulo’s water security plan and expanding its footprint into the energy sector.

The two-phase transaction follows the execution of collateral from a R$520 million debenture issuance by Phoenix Água e Energia S.A., a firm linked to Brazilian businessman Nelson Tanure.

In the first stage, Sabesp acquired 74.9% of EMAE’s common shares held by Phoenix, through the Phoenix FIP fund managed by Trustee. Those shares had been pledged as collateral for the company’s defaulted bond issuance, whose first interest payment was missed on September 27. The fiduciary agent Vórtx and administrator XP subsequently enforced the collateral, which included Phoenix’s entire stake in EMAE.

In the second stage, Sabesp signed a deal with Eletrobras (NYSE: EBR) to purchase 66.8% of EMAE’s preferred shares at R$32.07 per share, totaling R$476.5 million, while Phoenix’s common shares were priced at R$59.33 each. Once approved by Brazil’s power regulator ANEEL and antitrust agency CADE, Sabesp will own 70.1% of EMAE’s total share capital, consolidating control of one of São Paulo’s most strategic assets.

“By combining water security with energy potential, this acquisition enhances operational synergies and strengthens the company’s capacity to face climate challenges and rising demand for essential services,” said Daniel Szlak, Sabesp’s Chief Financial and Investor Relations Officer, in a statement.

Reservoir Integration and Energy Expansion

The deal is seen as a cornerstone of Sabesp’s post-privatization strategy. By taking direct control of the Billings and Guarapiranga reservoirs, the company aims to increase operational flexibility and reduce long-term water supply costs, especially as São Paulo faces its lowest reservoir levels since the 2015 drought.

Beyond water management, EMAE’s hydropower portfolio with inflation-linked long-term contracts will provide stable cash flow and revenue diversification, positioning Sabesp as a hybrid operator of water and renewable energy infrastructure.