Centuri Holdings takes the IPO route to expand. Here’s all you need to know

Utility infrastructure service provider Centuri Holdings, Inc. has initiated an initial public offering as it seeks to spin off from parent company Southwest Gas Holdings and become an independent entity. In a statement filed with the Securities and Exchange Commission, the Phoenix-headquartered firm revealed plans to offer around 12.4 million shares of its common stock in an initial public offering.

On completion of the offering, there will be about 86.66 million shares outstanding, which would value Centuri at $1.8 billion. The estimated issue price is between $18 and $21, at the mid-point of which the offering will generate proceeds of around $242 million. The company looks to list the stock on the New York Stock Exchange under the symbol CTRI. UBS Investment Bank, BofA Securities, J.P. Morgan, Wells Fargo Securities, Baird, KeyBanc Capital Markets, and Siebert Williams Shank are the underwriters in the offering.

Meanwhile, two investment entities affiliated with activist investor Carl Icahn have agreed to buy around 2.6 million shares of the company in a private placement, at a price equal to the IPO price.

Proceeds

The Centuri leadership plans to use $150 million of the net proceeds from the offering and the concurrent private placement to repay amounts outstanding under a revolving credit facility and to repay $111.2 million under a term loan. The remainder of the proceeds will be used for general corporate and working capital purposes. Post-IPO and on completion of the private placement, Southwest Gas Holdings will continue to own about 82.7% of Centuri’s outstanding common stock, or about 81% if the underwriters exercise their option to purchase additional shares.

The company generated revenues of $2.90 billion in fiscal 2023, compared to $2.76 billion in the previous year and $2.16 billion in fiscal 2021. The company incurred a loss of $186.2 million in 2023, wider than the $168.15 million loss it reported for the prior year. Adjusted EBITDA was $291.2 million, vs. $237.8 million in 2022.

The Company

Centuri is an infrastructure services company that helps regulated utilities build and maintain energy networks, mainly for electricity and natural gas, serving both residential and industrial customers. The company has more than 12,000 employees and is headed by chief executive officer William Fehrman. While its roots date back to the early 20^th century, the company in its current form was established in 2014. Since then, it has grown both organically and through acquisitions, with the most recent deal being the purchase of Riggs Distler & Company in 2021.