(Bloomberg) -- Brazilian power company Equatorial Energia SA is mulling a share offering of up to 2.5 billion reais ($450 million) to help finance the acquisition of a 15% stake of water utility Sabesp, according to people familiar with the matter.
Equatorial paid 6.9 billion reais to buy the stake on Monday and wants to use proceeds from the share sale to help pay down an 18-month bridge loan employed in the purchase, the people said, asking not to be named because the matter hasn’t been approved yet. The company is also weighing a bond sale with a longer maturity, according to the people.
Equatorial through a spokesperson declined to comment.
Some of Equatorial’s biggest shareholders would be willing to anchor the share offering, that is expected to happen in less than four months, the people said.
Opportunity Asset Administradora de Recursos — founded in 1994 by billionaire Daniel Dantas, his sister and a partner — is Equatorial’s biggest shareholder with a 6.3% stake, according to company filings. The second biggest is Capital World Investors, followed by Squadra Investimentos, Canadian Pension Plan Investment Board and Blackrock Inc., all of which hold around 5%.
The state of São Paulo raised 14.77 billion reais from the sale of 32% of Sabesp, priced at 67 reais per share, keeping an 18.3% stake. Total market demand for Sabesp shares reached 187 billion reais, a record for a public offering in Brazil, according to the government. In addition to the 15% purchased by Equatorial, investors including individuals purchased the remainder of the offering in a deal on July 18.
Shares of Equatorial were down 2% as of 3:54 p.m. Wednesday in Sao Paulo, in the first day of trading after the report of a possible equity offering. Sabesp shares slipped 1.1%, while the benchmark Ibovespa lost 0.2%.
(Updates with company response in third paragraph, shares in last)
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