Southwest Gas (NYSE:SWX) Holdings Inc has announced its plans to take its subsidiary, Centuri Holdings, public with an initial public offering (IPO) slated for spring or summer of 2024. This strategic move comes as the company prepares for a leadership transition, with Centuri’s current CEO, Paul M. Daily, set to retire in the same year.

The decision to pursue an IPO aligns with Southwest Gas’s broader financial strategy. The company aims to utilize the proceeds from the public offering to pay down its debt. Additionally, officials at Southwest Gas are considering various options post-IPO, which may include reducing their stake in Centuri or pursuing a tax-free spinoff, depending on how market conditions evolve at the time of the offering. The company has a substantial $932.8 million federal net operating loss carryforward that could mitigate taxable gains from the sale of Centuri shares.

As part of this process, Southwest Gas is actively searching for a new CEO to lead Centuri into its next phase. This announcement comes after a confidential draft IPO registration was submitted on September 22, 2023, signaling the company’s intention to go public.

The upcoming IPO is particularly significant given Southwest Gas’s stock performance over the past year. As of year-to-date figures in 2023, SWX shares have seen a decline of 2.5%, which contrasts sharply with the S&P 500’s rise of 19.7% over the same period.