Johannesburg — PAMODZI Investment Holdings yesterday sold its 77% stake in Foodcorp, the maker of Ouma rusks, Glenryck pilchards and Blue Ribbon bread, for more than R500m.

The sale of its stake in Foodcorp, which the unlisted Pamodzi took private in 1998, is part of a transaction that sees Foodcorp's management take control of the company with the backing of a UK funder. Foodcorp staff and management, which already held equity in the company, have increased their stake in the company to 51%, by investing another R111,92m. A new company, New Foodcorp Holdings, will own all Foodcorp shares.

London-listed BlueBay Asset Management spent R495,51m for a 44,44% stake in the new entity. South African investment company Capitau SA Partnership is taking a 4,56% stake for R30m.

The deal remedies one flaw in the company. "The management team were not incentivised in the historic structure," said Julian Wentzel, head of research at Macquarie First South Securities. "This provides the opportunity to lock in the current management team to the next phase."

Pamodzi executive director Kobus du Plooy did not say how much the company had made from the sale, but said it was happy with it. "We wouldn't have sold it otherwise."

Foodcorp CEO Justin Williamson said Pamodzi was walking away with "in excess" of R500m. "I don't think anyone would be unhappy with this kind of money, considering that the company is not listed," Williamson said. Wentzel agreed. "I don't think it was a firesale. The asset is of too good a quality. There was enough bidding interest to get a decent price."

Management and BlueBay were not the only bidders for the stake, Wentzel said.

Du Plooy said Pamodzi had not been trying to sell its stake for long. "We've only actively been looking in the past six months or so," he said.

This put him at odds with Williamson, who gave a longer timeframe. "We started looking at the beginning of last year. Unfortunately with the credit crunch, it was more difficult than we anticipated," Williamson said.

Wentzel praised Williamson's management of the company.

"He has done a remarkable job of managing a business which was equity light and debt heavy. He has managed working capital. He has the best working-capital-to-sales-ratio of any company in the (fast-moving consumer goods) sector. He's put a good management team around him."

Foodcorp yesterday said it was the first local company to refinance its business by raising €175m at 8,875% in the European high-yield market in 2005. It did so again in 2007, when it bought perishable food products business First Lifestyle after raising a further €135m on the high-yield market. Williamson said a relisting was a possibility for the group in the future. He said with the maturity of the company's R2,7bn bond in June 2012, Foodcorp could either issue another bond or a public offering.