Singapore's GIC and Brazilian firm Itaúsa are spearheading a $1 billion capital injection into Aegea Saneamento, diluting controlling shareholder Equipav. The private water utility plans to use the funds to strengthen its balance sheet and finance a potential bid for Minas Gerais' state-owned utility Copasa, one of Brazil's most coveted infrastructure assets.

This move comes as Aegea faces investor scrutiny after delayed earnings and credit downgrades into junk territory. The company is reviewing governance and cutting costs to lower leverage to about three times net debt-to-Ebitda by 2028, with 2 billion reais earmarked from the proceeds to reduce debt immediately.

Aegea has hired Itaú BBA, Citigroup, and BTG Pactual as advisers for the potential 30% stake offer in Copasa, which is central to Minas Gerais' privatization drive under Brazil's 2020 sanitation framework. The process will likely draw competition from Sabesp, which is also evaluating a bid with Banco Bradesco's advice.