AltaGas Ltd. (ALA.TO) is intensifying its shift toward the U.S., following up its US$4.6 billion takeover of Washington utility WGL Holdings Inc. with a plan to spin off its Canadian assets through an initial public offering.

The IPO and a debt repayment from the new company would deliver $1 billion in cash proceeds to AltaGas, which plans to use the money to repay a loan it took on to fund the WGL acquisition, according to a statement Thursday. The transaction would leave AltaGas focused on natural gas and U.S. utilities, while AltaGas Canada Inc. would own Canadian gas distribution and wind power assets.

Canadian utilities have taken aim south of the border in recent years, with AltaGas, Hydro One Ltd (H.TO). and Algonquin Power & Utilities Corp. (AQN.TO) striking deals for U.S. assets to spur growth. AltaGas plans to hold about 37 per cent to 45 per cent of AltaGas Canada following the IPO.

The planned offering follows AltaGas’s sale of some midstream and power assets announced earlier this week, and the sale of a 35 per cent interest in the Northwest Hydro Facilities in British Columbia.

Combined, the moves are expected to raise about $2.5 billion, resulting in “significant repayment” of a bridge facility used to finance the WGL acquisition.

The IPO, which is expected to close in late October or early November, is being jointly led by RBC Capital Markets LLC, TD Securities Inc. and J.P. Morgan Securities Canada.

AltaGas sank 3.9 per cent to $23.48 at the close in Toronto, where it also plans to list shares of the Canadian unit. The stock has declined 18 per cent this year.

--With assistance from Christine Buurma and Robert Lavelle