The fund is an Isle of Man-registered special purpose vehicle and part of the limited liability partnership Three Delta - made up of partners Paul Taylor and Isle of Man-based Delta Commercial Property Managers Limited. Both Delta Two and Three Delta are backed by the Qatar Investment Authority.

News of the fund's stake in the supermarket group first hit headlines in April as Delta Two became J Sainsbury's largest single shareholder.

This was followed on July 18 by an announcement that the two groups were 'in preliminary discussions' about the possibility of a 600p cash offer for the balance of the ordinary share capital.

Financial media have been full of the ups and downs of those discussions ever since. But negotiations were formally terminated with a release issued on November 5.

Paul Taylor said: 'Having given careful consideration to the additional funding requirement and its impact on prospective investment returns, Delta Two has regretfully concluded that a recommendation to proceed with the proposed transaction would not be in the best interests of stakeholders and, therefore, such a recommendation cannot be made.'

Mr Taylor expressed appreciation for the co-operation of both the board and its pension trustees during discussions and added that Sainsbury was 'an excellent company with a strong management team, leading market position and strong long-term growth opportunities'.

The reason given for the breakdown of the bid was a significant increase in funding and cost of capital.

'This reflected a combination of factors including the deterioration of credit markets which impacted (on] the terms of lending and other facilities available ...' a spokesman said.

Arrangements for the future funding of the Sainsbury pension schemes were also a major sticking point. Backing from the pension trustees was essential to the deal, with analysts estimating that Delta Two would need to offer as much as £2 billion up front to guarantee future payments.