The Canada Pension Plan Investment Board is giving a Brazilian water and sanitation services company an additional $532-million equity injection.

The move comes after Iguá Saneamento was named the winning bidder of a major concession contract in the Brazilian state of Sergipe following an auction process. The concession will soon be the second-largest in Brazil, with Iguá providing  water distribution and sewage collection and treatment services to 74 municipalities across the northeastern Brazilian state. 

As a result, Iguá will be operational in seven Brazilian states, providing potable water and sewage treatment services to approximately five million customers.

“This is a transformational acquisition for Iguá, which continues to serve as an excellent platform through which [CPPIB] can identify and gain access to the most attractive investment opportunities in the Brazilian water and sanitation market,” said James Bryce, the Toronto-based pension plan manager’s global head of infrastructure.

“This sector has significant room for growth while also providing opportunities to invest in long-term, stable assets at scale. We expect our investment in Iguá will continue to deliver strong returns for the CPP fund, and we look forward to supporting the company’s success through this follow-on investment.”

Prior to making the additional financial commitment, CPPIB held a 61.4% stake in the company. The Canadian organization began investing in Iguá in 2021 as a platform for further investments in Brazil’s water and sanitation sector.

Photo: Iguá Saneamento