One of Debenhams' key private equity backers at the time of its stock market float two years ago triggered a £100million share price plunge in the retailer yesterday by selling its entire stake.

Merrill Lynch Private Equity placed 47 million shares — 6 per cent of Debenhams' entire share capital — with institutional investors at an estimated sale price of 60p each.

Debenhams shares closed at 71.5p on Tuesday and the placing sent the stock tumbling 17 per cent, or 12.25p, to 59.25p, yesterday.

It is thought that Mahesh “Micky” Jagtiani, the Dubai-based entrepreneur, and Bestinver, the Spanish fund, took advantage of the move to boost their respective shareholdings in the business.

Sources close to Merrill Lynch explained that the group had decided to cash in on its stake given the brief rally in Debenhams' shares after its encouraging trading statement last week when Rob Templeman, the chief executive, said that the group was gaining market share. Merrill Lynch's private equity arm has not had any representation on the Debenhams board for much of the past year.

The surprise move handed the investment bank an estimated £28 million windfall.

The sale price, however, represents a substantial discount to the 195p price tag put on Debenhams' stock when it returned to the stock market at the start of 2006.

Debenhams shares collapsed soon after the market float amid a series of profit warnings that fanned the flames of the debate about the merits of private equity ownership.

Debenhams was flipped back on to the stock market after less than three years under the ownership of Merrill Lynch Private Equity, Texas Pacific Group and CVC. Analysts argued that the private equity consortium had not invested enough in the foundations of the business before the float.

Sources close to both Texas Pacific and CVC insisted yesterday that neither private equity house had plans to follow Merrill Lynch and sell their stakes.

— Jessops, the troubled photographic retailer, is cutting 200 more jobs just months after closing a quarter of its stores.

The group, which was brought to the stock market four years ago by the ABN Amro-led private equity consortium, added that its like-for-like sales were down 5.1 per cent in the 25 weeks to March 22.

David Adams, the executive chairman of Jessops, said: “Our trading performance reflects the difficult and uncertain environment we operate in.”

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