Grand Parade Investments (GPI) 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 ($47 million).

The announcement sent shares in GPI up 9.09% to 3.60 rand, their highest level since Dec. 11.

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 (iNAV).

U.S.-based Burger King, maker of the Whopper Burger, opened its first South African outlet in Cape Town in 2013 and competes with market leader McDonald's Corp and other burger chains such as RocoMamas.

It now has 92 outlets across the country, and has helped lift GPI earnings thanks to higher sales from new restaurants and improving same-store sales.

Paul Maasdorp, managing director of ECP, said in a statement that Burger King represents an attractive opportunity to invest in one of the largest restaurant groups in South Africa and "is an aspirational global brand with good awareness in South Africa's middle-income groups."

"We believe that ECP is well positioned to act as a value adding partner to management in helping the company achieve its growth ambitions through our expertise in the sector, and deep experience in helping companies expand in Africa," Maasdorp said, adding that Burger King has the potential of doubling its number of outlets in South Africa in the next five years.

"Beyond new locations, there are also multiple new menu items that will offer value for money and great tasting alternatives to South Africans," he added.

ECP Africa has 60 investments including Java House, now the largest coffee house in East Africa, and a recent investment in Artcaffe, one of the leading casual dining chains in Kenya.

Included in the sale of the Burger King franchise is Grand Foods Meat Plant which makes burgers, predominantly for Burger King in South Africa.

($1 = 14.9811 rand)

- Reporting by Nqobile Dludla.