Mumbai: Project-financing company IFCI Ltd posted its biggest drop in more than a decade in Mumbai trading after it scrapped a plan to sell a 26% stake, disappointing investors who had driven the stock up eight-fold this year.

IFCI shares fell Rs23.30, or 23.29%, to close at Rs76.75 on the Bombay Stock Exchange (BSE), after falling as much as 27% during the day, the biggest decline since, at least, February 1994. The decline wiped out Rs1,480 crore from the company’s market value.

The move dashed expectations for a strategic partner, which investors had counted on to help the New Delhi-based company raise capital and manage assets acquired from failed loans.

Task cut out: IFCI chief executive officer and MD Atul Kumar Rai. The firm on Wednesday failed to agree too investors’ terms.

IFCI, which was bailed out by the government, on Wednesday failed to agree on terms with investors led by Sterlite Industries (India) Ltd and Morgan Stanley to take a 26% stake.

“It is a major disappointment for investors and the stock may lose as much as 40% in the next few days," said M.A.A. Annamalai, director at Akshaya & Co., a Chennai-based retail stockbroker. “It may be a long time before investor interest returns to it."

The board of the project-financing company, India’s oldest, will meet later to seek other ways to revive the business, S.P. Arora, IFCI’s company secretary, had said on Wednesday, without elaborating.

The run-up in the share price ahead of the final bids also deterred buyers. Seven of the 10 investors, which indicated interest earlier, pulled out of the final bidding.

Sterlite Industries and Morgan Stanley were front-runners to clinch the stake after investors such as Blackstone Group Lp. and Goldman Sachs Group Inc. dropped out.

J.C. Flowers and Co. Llc., the private-equity firm founded by J. Christopher Flowers, a former Goldman Sachs managing director, had planned to bid with Tokyo-based Shinsei Bank Ltd and India’s Punjab National Bank Ltd, IFCI had said in September.

Infrastructure Development Finance Co. (IDFC) chief executive Rajiv Lall had said in October that the price had risen too much. IDFC pulled out of the bid, as well as Natixis SA. of France and India’s Kotak Mahindra Bank Ltd.