The City has welcomed Nestor Healthcare's decision to separate its recruitment arm from the rest of the company, but some analysts say it may lead to the business being sold.

The shares rose more than 13% on the day of the announcement.

Nestor's recruitment business will be named after Pinnacle, one of its existing brands. It will trade as Pinnacle Staffing Group on the Alternative Investment Market.

Nestor will continue to trade on the main list. It will focus on primary care and social care, and drop the "healthcare" part of its name.

The company said the two businesses were "fundamentally different". There were no compelling reasons why they should remain part of the same group.

Pinnacle's senior management will largely consist of those currently in senior roles in Nestor's recruitment business. Julie Greenwood will be chief executive. Stephen Booty will remain chief executive of Nestor, but will be a non-executive on Pinnacle's board.

Nestor's total market value is about £100m, but Pinnacle may only be worth about £25m, said Ian Jermin, an analyst at Bridgewell Securities.

"The demerger will make it easier to sell the recruitment arm," said Jermin. "Although it's still not very attractive to a buyer."

He added: "The shares seem to have risen because the company's done something (the demerger). But it's just cosmetic."

The demerger is likely to take place in August or September.

In a trading statement accompanying the announcement, Nestor said that conditions for the staffing business remained "challenging". It said the pressures on NHS budgets were "adversely inpacting on volumes". It supplies nurses and allied health professionals, such as physiotherapists, to the NHS.

The update follows similar downbeat statements on the recruitment side of its business earlier this year.

Pinnacle aims to expand into higher growth markets, notably complex nursing care at home and the management of temporary staffing banks for the NHS.

Pinnacle did not respond to requests for an interview.