Britain’s largest charity, today emerged as the mystery investor that has been building a stake in Marks & Spencer.

The Wellcome Trust said it had taken a 2.5 per cent shareholding, acquiring 39.35 million shares, as part of its long-term investment strategy.

Shares in M&S fell by 2 per cent, down 5.25p to 278.75p, after the statement which dented speculation that a potential bidder has been sizing up the high street chain.

Traders said that the Halley family, until recently the largest shareholder in Carrefour, the French supermarket giant, was rumoured to be building a stake in M&S.

The Wellcome Trust's £15 billion investment fund is run by Danny Truell, one of the most influential fund managers in the City. The charity achieved record returns of 17 per cent in 2007.

In a statement the charity, which spends up to £600 million a year funding biomedical research, said: "Following today's press speculation, Wellcome Trust confirms that it has acquired 39.35 million shares equivalent to 2.5 percent of the issued share capital of Marks and Spencer in recent weeks.

"This investment is part of Wellcome Trust’s long term investment portfolio."

Marks & Spencer's shares have fallen by nearly 60 per cent in the past year as it battles the fallout from the credit crunch. More than £1.2 billion was wiped off the retailer's market value last month following a profits warning.

The Times revealed today that Carl Leaver, the former chief executive of the De Vere hotels group, has emerged as the front runner to replace Sir Stuart Rose in charge of the business when he steps down in two years' time.

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