Tesco investors spooked by concerns over a '£5 billion hole' in its pension fund

Tesco boss Dave Lewis’ attempts to revive the ailing supermarket’s battered reputation in the City have been dealt a blow as investors sold out amid concerns over its pension fund.

Shares fell as low as 232.9p after JP Morgan Cazenove, which was Tesco’s corporate broker until 2013, claimed the retailer would need to raise cash to plug a £5 billion hole in its pension fund.

The broker said it was “difficult to believe” Tesco could improve margins and pay down debt without raising capital.

Shore Capital analyst Clive Black estimated that the grocer's pension deficit has grown to £4.5 billion pounds, up from £3.4 billion at the end of the first half and eclipsing the £3.37 billion it made from operations in the year to February 2014.

It is a blow to ‘Drastic Dave’ Lewis just two days before he is expected to report the biggest loss in the supermarket’s 96-year history.

He has garnered respect in the City for his no-nonsense attempts to rebuild Tesco's image following the £263 million accounting scandal.

Lewis could unveil fresh plans to bring down Tesco's pension deficit in the April 22 results announcement. He earlier suggested closing Tesco's 350,000 member scheme to all employees.

Shares recovered to 235.62p, down 1.09p.