* IPO could value Odebrecht Ambiental at $3 billion
* Firm could offer 25 pct of stock via capital increase
* CEO says wants to build a global water company
* Private equity large investor in Brazil water stocks (Adds Odebrecht ambitions, private equity in Brazil water stocks)
By Geert De Clercq
PARIS, Sept 19 (Reuters) - Odebrecht Ambiental, part of Brazil’s Odebrecht conglomerate, plans to list some of its shares next year or in 2016 as it seeks to grow into a global water and waste treatment provider.
Odebrecht Ambiental is 70 percent owned by Grupo Odebrecht SA, Latin America’s largest engineering group, and 30 percent by Brazilian worker compensation and retirement fund FGTS.
“We are planning an IPO (initial public offering) for 2015, no later than 2016, depending on market conditions,” Odebrecht Ambiental CEO Fernando Santos-Reis told Reuters in an interview in Paris on Friday.
He said the funds raised would be used for new investments and acquisitions.
Santos-Reis said Grupo Odebrecht aimed to keep majority control and that FGTS had not yet decided whether it would sell some of its holding.
Last year, FGTS valued Odebrecht Ambiental at 6.4 billion reais ($2.7 billion) in its accounts, which would mean that an IPO of 25 percent of the firm’s capital - a level often seen for initial listings in Brazil - could raise about $700 million.
The firm - which employs 7,000 people - has had talks with some banks about the operation but has not mandated anyone yet.
The Sao Paulo Stock Exchange has not seen a single new listing since December 2013 and Brazil’s IPO market is heading for its worst year in at least a decade.
But speculation that President Dilma Rousseff could lose an October election to a more market-friendly challenger has boosted Brazilian stocks and reignited interest in new listings.
With about 20 million people served by its water and waste water division, Odebrecht is one of the world’s top ten water firms, but most of its customers are in its home market.
Odebrecht already has a presence in Angola, Mexico and the United States, and is considering bidding for a water concession in Maputo, Mozambique.
“In the next decade, we want to build a Latin America-based global water company,” Santos-Reis said. Odebrecht Ambiental is already Brazil’s biggest private water and waste water company.
On the international front, Odebrecht has some catching up to do. In 2013, global market leaders Veolia and Suez Environnement served 124 million and 118 million people respectively, of which 80 to 90 percent abroad, according to Global Water Intelligence (GWI).
In Brazil, which has a population of about 203 million, about 80 percent of the water market is still in public hands. Of the rest, Odebrecht has a market share of about 50 percent after buying up a string of smaller private competitors in recent years. Its local private competitors include Grupo Aguas do Brasil, Aegea, and CAB Ambiental.
It also competes with SABESP, which is the world’s fourth-largest water and waste water group, serving nearly 29 million customers, according to GWI. Half-owned by the state of Sao Paulo, it has a market value of $6 billion.
Like COPASA and SANEPAR - two publicly owned water and sewage companies with market values of $1.82 and $1.1 billion respectively - SABESP is not involved in industrial water or solid waste.
Major private equity players and funds such as the Norwegian sovereign wealth fund, Pictet Asset Management, UBS Global Asset Management and BlackRock have significant minority stakes in the listed Brazilian water firms, as they have in Veolia and Suez.
Last year, Odebrecht Ambiental had earnings before interest, tax, depreciation and amortisation (EBITDA) of 450 million reais and revenue of 2.8 billion reais ($1.19 billion), of which 50 percent in municipal water and sewage, 30 percent in industrial water and 20 percent in solid waste.
Santos-Reis said Brazil’s rapid economic growth was underpinning Odebrecht Ambiante’s industrial water unit and he saw huge opportunities in waste water as only about 20 percent of all sewage in Brazil is treated.
In industrial water in Brazil, the company has no major local competitors and competes fiercely with Veolia for contracts in the chemical, petrochemical, steel, mining, oil and pulp and paper sectors.
It operates about 10 large industrial water assets in Brazil, including for steel tube maker Vallourec, for steel maker ThyssenKrupp, oil company Petrobras and petrochemical firm Braskem, which is also part of the Odebrecht conglomerate.
1 US dollar = 2.3624 Brazilian real Additional reporting by Guillermo Parra-Bernal; Editing by Tom Pfeiffer and Mark Potter