The global financial crisis will not affect investments in water and sewerage since the sector provides good opportunities, Rio de Janeiro state water company Cedae's investor relations and finance director, Fernando Avelino, was quoted as saying by local paper Gazeta Mercantil.
Cedae is being restructured and is getting ready to launch an IPO in the middle of next year, the report said.
For year-end or in January 2009, the utility is planning its first bond issue with which it expects to raise nearly 400mn reais (US$182mn), Avelino said.
"We have been implementing corporate governance since 2007, we already have two independent consultants, we have reduced costs, renegotiated contracts, we have implemented new tender processes, raised income and we operate today with our own resources, without needing funds from Rio government," the executive was quoted as saying.
The 400mn reais will be invested in four projects, according to Avelino, which are part of eight high-profit initiatives that Cedae has been presenting to foreign investors, plus two that are already in the planning stages.
Expansion projects include Macaé's water and sewerage network, an area with oil and gas companies, and the expansion of the networks in Maricá, which is next to the Comperj petrochemical complex. The firm also has an expansion project in the Barra da Tijuca neighborhood, in Rio city, and is planning to renew 200,000 water meters.
Already this year the company has made two presentations abroad of the expansion projects in its portfolio, with the objective of becoming better known on the international scenario and attracting foreign investment.
The first was in the US and the second was to sovereign fund representatives from 11 Asian countries. These events are a sort of preparation for the roadshow that the firm plans to do before launching the IPO, the report said.
According to market projections, sovereign funds will have around US$3tn in assets under management, with a large portion concentrated in Asia or the Middle East. Two funds from Singapore - Temasek Holdings and Government of Singapore Investment Corporation - have almost US$500bn.
Avelino said that these funds are very interested in projects in Latin America and particularly in Brazil, especially after the country obtained the investment grade.
"We made good contacts and some groups are planning visits to Cedae," Avelino said.
Rio state government currently owns 99.9% of Cedae's capital. The company provides water services to 9mn people and basic sanitation services to 5mn people in the state. The utility holds water service concessions in 65 of the state's 92 municipalities and sanitation concessions in 17 municipalities.
Net operating profit in 2007 was 2.54bn reais.
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