Shares of the Brazilian water utility Sabesp took a dip this week after it said it might raise new equity. Investors everywhere, however, will have to get used to such capital calls.
Citigroup estimates that water companies need to spend up to $10 trillion globally by 2029 on new and upgraded infrastructure.
It’s true that Sabesp, the world’s fourth-largest water and sanitation company, could have done a better job with communication. Its missive at the end of last week didn’t mention amounts or timing, and only when asked did executives say that nothing is likely to happen for at least a year.
Sabesp’s current ownership complicates matters, too. The State of São Paulo owns a 50.3 percent stake, and any recapitalization plan would have to keep the government in control. Investors registered their confusion by sending the stock down on Monday and on a roller-coaster ride the next two days. Read more
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