Dawnay, Day, the investment group, unceremoniously began dumping its stake in F&C Asset Management on Thursday, sending shares in the fund manager plummeting and raising fresh question marks about a future sale of the business.

Shares in F&C lost almost a third of their value as the broker Kaupthing tried to place almost 95 million shares, or 19 per cent of F&C, in the market for about £1 each.

More than £188 million was wiped off F&C's market worth, which stood at almost £670 million first thing on Thursday morning.

Investors interpreted the move as a signal by Dawnay, Day that it had abandoned hopes that F&C would be sold to a strategic buyer. F&C closed 28 per cent down, off 38.25p at 97.5p.

Others speculated that the investment firm had been forced into the sale, having received calls for extra collateral, or margin calls, to cover its positions following the recent slide in F&C's share price.

Sources familiar with the matter acknowledged that Dawnay, Day would have suffered a loss as a result of the £95 million sale, but declined to be drawn on the details. A formal statement to the market about the disposals is expected on Friday.

Dawnay, Day first began to build a stake in F&C last February, when the shares were trading at about 190p. Most of its exposure was through derivatives known as contracts for difference so the exact price it paid is not clear.

It shot to prominence as the fund manager's second-largest shareholder last August, when it publicly objected to plans for an £8.4 billion merger between Resolution, the closed life funds group, and Friends Provident, the insurer that owns 52 per cent of F&C.

That deal subsequently collapsed. However, Dawnay, Day continued to buy shares in F&C as Friends Provident put its stake in the firm under review for a possible sale in January. Market sources said Dawnay, Day was still buying up shares as recently as last week.

Dawnay, Day’s sell-off could mark a setback for Friends Provident, who is still exploring a sale of the stake in a process it has admitted could be lengthy but has insisted is proceeding satisfactorily.

Sources familiar with the matter admitted that disposing of the F&C stake could prove more difficult in the wake of Dawnay, Day’s sale, with investors unwilling to buy even more shares. Friends may also have been rattled by the deep discount on offer. Others said the departure of such a large holder may actually make it easier to sell the whole company.

Dawnay, Day, F&C and Friends all declined to comment.

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