(Bloomberg) -- Sabesp, Latin America’s biggest water utility by market value, launched a share offering that may become the region’s largest in two years. 

Sao Paulo state, which owns a controlling stake in Cia de Saneamento Basico do Estado de Sao Paulo, as the Brazil utility is formally known, is offering 191,713,044 existing shares for sale, according to a filing Friday. If an over-allotment is fully sold, it could add as many as 28,756,956 shares to the transaction.

At current market prices, that means the transaction could raise up to 16.5 billion reais ($3 billion), while Sao Paulo’s stake in Sabesp could fall to 18% from the current 50.3%, effectively privatizing the company. The deal is expected to price on July 18.

Sabesp is working with Banco BTG Pactual SA, UBS BB Investment Bank, Bank of America Corp., Citigroup Inc. and Banco Itau BBA SA on the equity deal. Bradesco BBI, Goldman Sachs Group Inc., JPMorgan Chase & Co., J. Safra, Morgan Stanley, Santander and XP Inc. are the joint bookrunners.

The sale would be a win for right-wing Sao Paulo Governor Tarcisio de Freitas, who has vowed to privatize companies to improve public services. It also follows the blockbuster deal that privatized power company Eletrobras in 2022.

The share offering has a distinctive feature: In a first stage, two strategic investors will be selected and compete to snap up a 15% stake in Sabesp. Then, two books will be built around those offers, competing to lure the most bids from general investors. The winning book will be the one that secures the highest weighted average price.

The process has lured power company Equatorial Energia SA, private utility Aegea Saneamento e Participacoes SA and Brazilian investor Nelson Tanure. 

The sale comes amid a drought of Brazilian initial public offerings and a 22% decrease in Brazilian share offerings this year. 

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