Grand Parade Investments Ltd said on Wednesday it is selling the Burger King South Africa franchise and a related burger-making plant to private equity firm ECP Africa Fund for 697 million rand .ECP Africa said that despite a difficult economic climate, it could double the number of Burger King outlets across South Africa in the next five years.
GPI bought the Burger King franchise in 2012, betting on South Africa's lucrative fast-food market, consumer appetite for flame-grilled burgers and their price appeal. However, South African retailers have been struggling to boost sales as a slowing economy, high unemployment rate and rising fuel costs reduced consumers' spending power.
"The board considered the sale of GPI's stake in Burger King South Africa in the context of the group's strategy of unlocking value for all shareholders and has decided that the best way forward is to initiate a controlled sale of assets," Chief Executive Mohsin Tajbhai said in a statement. GPI has traded at a significant discount to the value of its underlying assets, Tajbhai said, adding that the South African firm implemented a"value-based strategy" two years ago, aimed at reducing the discount at which the group's share price trades relative to its intrinsic net asset value .
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