Wall Street is expecting the sale of a $1.2 billion (£607 million) stake in Burger King, the fast-food chain, over the next year as three private equity groups seek to sell their remaining 32 per cent holding.

TPG Capital, Bain Capital and Goldman Sachs Funds yesterday withdrew their own three executives from the board of Burger King as they reduced their investment in the company.

At the beginning of May, the three groups said that they were selling 15 million Burger King shares through a secondary offering in a move that will reduce their combined stake from 43 per cent to 31.6 per cent.

The funds have been decreasing their holdings over the past year, having made a 424 per cent return on their combined investment in Burger King since they acquired the company in 2002. They bought the company, known as the home of the Whopper, for $1.5 billion six years ago from Diageo, the UK-based drinks company. Having initially taken the burger chain private, the three firms then refloated the business two years ago, raising $425 million. Before the float, the private equity groups paid themselves $367 million in dividends and have been paring their stake ever since.

Granted their firms’ reduced level of ownership, David Bonderman, Andrew Balson and Adrian Jones, representatives of TPG, Bain and Goldman Sachs, said yesterday that they plan to resign from the Burger King board, on which they serve as nonexecutive directors, at the end of June.

Brian Swette, the chairman of Burger King, also said that he would reduce his role to become a nonexecutive. John Chidsey, the chief executive, has been promoted to joint chairman and chief executive.

John Owens, a food sector analyst for Morningstar, the Chicago brokerage, said: “Over time we expect them [the three private equity groups] to sell out. It’s hard to speak for them, but I would not be surprised if over the next year or two they sell their entire stake completely. They have been selling since their lockup expired.”

In November, the three private equity firms sold 19.9 million shares through another offering, pushing their ownership below 50 per cent.

Mr Owens said that Burger King had moved on from being a recovery stock and that the business was now a growth investment that had been performing well.

Burger King has boosted sales by rapid international expansion into countries such as China and it has also increased its business in Europe, the Middle East and Africa. The shares have recovered from a low of $13 in August 2006 to $28 this month. Mr Owens has told clients that he believes the stock to be worth about $29.

Although fast-food businesses are not immune to a recession, ones such as Burger King tend to fare well in hard times because Americans will trade down when their budgets are limited, eating at a cheaper restaurant rather than not dining out at all. Big chains such as McDonald’s and Burger King can also afford to keep prices lower because their size allows them harder bargaining power, even when food costs are soaring. McDonald’s has introduced the “Dollarmenuaire” and is selling coffee far cheaper than rivals such as Starbucks to cater for Americans watching their spending closely.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive