AEGEA Equity

completed

The proposed investment consists of an equity investment of USD 25 million in AEGEA Saneamento S.A. (AEGEA or the company) by IFC and the IFC Global Infrastructure Fund. This stake is intended to support AEGEA’s continued investment in brownfield municipal water concessions and acquisition of existing private concessions and sub- concessions throughout Brazil, including into “frontier” regions in the North and Northeast of Brazil. AEGEA is a leading private provider of water and sanitation services in Brazil. As mentioned above, AEGEA is an existing IFC client, with whom IFC committed a BRL100 million corporate loan in June 2012 and subsequently took a minor equity stake in December 2012. The company invests in projects that result in improved water and sanitation services for the population of municipalities throughout Brazil. AEGEA is pursuing projects throughout the country, by bidding on new concession and Public-Private Partnership (“PPP”) contracts and negotiating acquisition of existing poorly performing concessions. Currently, AEGEA operates the water and sanitation services in the city of Campo Grande in Mato Grosso do Sul state (through Aguas Guariroba) and in five municipalities in Rio de Janeiro state (Cabo Frio, Buzios, Iguaba Grande, São Pedro da Aldeia and Arraial do Cabo), through long-term concession contracts. It also operates a PPP for sewage collection and treatment and management of hydrometers through a long-term contract in the city of Piracicaba in Sao Paulo state (through Aguas do Mirante). In 2012, AEGEA acquired 51% of Nascentes do Xingu, a group of 14 full water and sewage concessions and 3 water concessions in the state of Mato Grosso (Carlinda, Peixoto, Jauru, Marcelândia, Claudia, Santa Carmen, União do Sul, Vera, Sorriso, S.J. Rio Claro, Nortelandia, Jangada, Campo Verde, Primavera do Leste, Pocone, Pedra Petra, Barra do Garcas and Porto Esperidião) AEGEA uses a structured process to select its target cities based on 4 filters, which improves the probability of success for new businesses. Once the cities are selected, the company starts a process of Statement of Interest Process (PMI), including the development of preliminary studies and requirement of an authorization to the granting authority to prepare a Statement of Interest. The analysis and approval of more detailed Statement of Interest Studies are followed by the approval of a law that authorizes the concession. In cases where AEGEA becomes the concessionaire of an existing asset, AEGEA conducts an audit to help prepare the investment plan required under the concession. The audit includes a review of status of legal permits, including environmental licenses. Where environmental licenses are already in place, AEGEA ensures that facilities continue to operate according to permit requirements, otherwise, AEGEA addresses existing gaps in licensing to bring the facilities into compliance.