Tower head throws cold water on rumour

Resurgent dual-listed financial services company Tower has no immediate plans to demerge any of its businesses but is not ruling out doing so some time.

Yesterday, the Australian newspaper reported a rumour that Tower was working on demerging its insurance and funds divisions.

However, managing director Jim Minto said the company had no such plans. "I can't say that we're about to do anything on that front at this point."

But Minto did not slam the door on the prospect. "We look at all options to add more shareholder value. We've been very focused on that and you never ever rule things out."

Minto was aware of the rumour and wasn't surprised by it.

"We're an attractive business of a particular size and we've done one of these once before with spectacular success," he said, referring to Tower's spin-off of its Australian Wealth Management subsidiary last year.

ABN Amro analyst Nick Caley said rumours had circulated for some time but he believed a geographical split was more likely after the company bought South African-owned Australian rival PrefSure this year.

"It gives them a business of sufficient scale if they wanted to demerge Australia.

"They'd be attracted by how Australian Wealth Management worked out for them. That was a nice bit of engineering, and presumably the Guinness Peat Group guys love a bit of engineering."

Guinness Peat Group, which owns 18.1 per cent of Tower and has two seats on its board, bankrolled the $211 million capital-raising that helped put Tower back on its feet in 2003.

Since then it has invested about $155 million in Tower and associated companies, including AWM.