GPG proposes giving shareholders shares in two entities: GPG Australia, which would be listed in New Zealand and Australia; and GPG PLC, where its non-Australian assets would be listed in New Zealand and the United Kingdom.
The restructuring was considered alongside several alternatives, from maintaining the status quo to a liquidation of the group's assets.
Chairman Sir Ron Brierley reiterated comments made in London last month that the current business model no longer worked for GPG and structural change to preserve value was "a complex equation".
"This proposal will create an exciting and regionally focused activist investment company in Australia with the entrepreneurial flair to create value for shareholders ... as well as a more concentrated portfolio of high-quality investments," he said.
However, Forsyth Barr broker Suzanne Kinnaird said the demerger proposal was only "splitting out the Australian business", and "did not really do anything for value realisation".
"I would not regard it as certain that the demerger will be approved by shareholders," she said.
Full demerger documentation is scheduled to be sent to shareholders in October, with a vote in November.
"The market is likely to be disappointed as we were looking for more progress towards value realisation.
"This is just a reshuffle of assets, with a float of Coats still up to two years away," Ms Kinnaird said.
London-based loss-making Coats, with its exposure to recession-hit European markets, was difficult to value and "held back" GPG share strength, given that it made up 42% of assets, she said.
Parent GPG said in a statement the restructuring was a prerequisite to launching an "efficient and value-enhancing" float of Coats, which had delivered an improved performance this year amid the global financial crisis, and anticipated a float "within the next two years".
"It is considered that an immediate flotation of Coats is not in shareholders' best interests given the nascent stage of recovery in relation to Coats' markets and customers, and the current uncertainty in relation to international financial markets".
Ms Kinnaird said after a Coats float the remaining UK and New Zealand assets could also be split into separate investment companies, noting the majority were already listed companies.
"The timetable is long; the demerger will not proceed until late this year.
"It is conceivable that if markets are strong, the timing of a Coats sale could be brought forward, which would change the proposal," she said.