UK's third-biggest property group, Liberty International has announced plans to split into two separate companies to have a more focused approach toward its business.

The company will split into two subsidiaries namely, Capital Shopping Centres and Capital & Counties who will manage separate parts of the £6.2 billion portfolio of Liberty. Capital Shopping Centres will be a real estate investment trust which will manage 13 shopping centres worth £4.6 billion while Capital & Counties will be a property company.

The Shopping Centre unit will be headed by David Fischel who is the chief executive of Liberty. The unit will manage MetroCentre, Gateshead, half of the Arndale Centre in Manchester, Lakeside in Essex and half of St David's 2 in Cardiff.

Capital & Counties will be headed by Ian Hawksworth who is the managing director of Liberty. The firm will focus on buying properties to expand its Covent Garden portfolio and on winning planning permission for the Earl's Court & Olympia sites. It will have to invest around £30 million in the process. The total assets managed by Capital & Counties will be worth £1.6 billion.

The chairman of Liberty, Patrick Burgess explaining the splitting of the company said that the changes in the market demands new focus on the investments in shopping centres and property businesses. He said that investment units also require a separate more active management.

The company has also indicated that it is in talks to sell its American assets by looking for tax efficient options to sell all its assets in the country over time.

The process of splitting into two companies will be completed by end of May and after which it will have to receive shareholder's approval along with the agreement from the South African authorities. The firm is listed in South Africa as well as in London. The process will cost around £11 million.

Liberty was established by Sir Donald Gordon 1980 who has approved the demerger. He will hold around 14.8 per cent stake in both companies.

The company has decided to issue one new share in Capital & Counties for every share in Liberty to its shareholders. The decision comes after the company was able to raise £866 million in the past 12 months even as the markets were recovering gradually.

Patrick Burgess said "Neither we, nor our retail tenants, nor the shoppers who made over 300 million visits to our shopping centres and Covent Garden found the year under review an easy year. However, the Group's experience in recent months has been encouraging."

Liberty managed to bring down its losses from £2.7 billion to £329 million between 2008 and 2009. It announced a dividend of 16.5p.

Experts say that the company has taken the appropriate decision to spit and said that the Capital & Counties will most likely have to raise debt for the Earl's Court and Covent Garden projects.