German energy outfit RWE has decided to pursue an initial public offering (IPO) in the US for the shares of its subsidiary American Water.

RWE had previously announced in November last year its intention to divest American Water either through an IPO or by selling the company to a group of financial investors.

The IPO will result in American Water returning to the status of a publicly-traded company with a focus on water and waste in the US.

The sales process is expected to be initiated shortly. The IPO will require filing of a registration statement with the US Securities and Exchange Commission. The transaction will also be subject to the approval of the RWE board.

RWE said in a statement that it hopes to complete the IPO process during 2007.