Canada Pension Plan Investment Board Buys Stake in Iguá Saneamento

Posted on 03/22/2021

Canada Pension Plan Investment Board (CPP Investments) has agreed to invest an expected R$1,178 million (C$270 million) for a 45% aggregate stake in Iguá Saneamento S.A. (“Iguá”), partnering with other existing investors including Alberta Investment Management Corporation (“AIMCo”) and IG4 Capital Group (“IG4 Capital” or “IG4”).

Iguá is a water and sewage service holding company operating 18 concessions and contracts across five Brazilian states, and providing sanitation services for more than six million people. Iguá is the third-largest private water and sewage treatment service provider in Brazil. The company is focused on acquiring concessions and forming public-private partnerships to build scale in the Brazilian water and sewage sector.

The CPP Investments transaction includes both an initial and a secondary acquisition of interests in Iguá. The primary capital contribution from CPP Investments into Iguá is expected to be R$514 million (C$118 million) and will be used to support the company’s growth objectives. A secondary investment for a consideration of an expected R$664 million (C$152 million) will also be made. The transaction is subject to customary closing conditions and regulatory approvals.

CPP Investments will ultimately hold its 45% aggregate stake in Iguá through Iguá Fundo de Investimento em Participações Multiestratégia (“FIP Iguá”) and Mayim Fundo de Investimento em Participações Multiestratégia (“FIP Mayim”), the current direct controlling investment entities of Iguá that will continue to be managed by IG4 Capital without a change of control.

AIMCo will own an estimated 39% aggregate stake in Iguá through a direct interest in the company and an interest in FIP Iguá and FIP Mayim alongside CPP Investments and IG4 Capital. IG4 Capital will have an estimated 5% of Iguá at closing. BNDES Participações S.A. (“BNDESPar”) will also own a direct stake of up to 11% of Iguá at closing.

IG4 Capital is a specialist alternative investment asset management firm with offices in London, São Paulo, Santiago, Lima, and Madrid. IG4 has approximately US$ 700 million under management.

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