Candover Partners, the quoted private equity firm, today said the current funding crisis in the credit markets will force the pace of buyouts to slow in the second half of the year.

Colin Buffin, the managing director of Candover, today became one of the first players in the industry to break cover over the implications for private equity of the past two months of market turmoil. He said it was likely that asset prices would fall over the coming months.

"During the early part of the year, private equity was buoyant. It is now less buoyant," Mr Buffin said.

"The banking market has not had an impact on the real world in terms of consumer demand and the stock market. The issue for us is what happens over the next three to six months," he said.

Mr Buffin gave his assessment of the market as Advent International, secured a £524 million takeover of Domestic & General, the extended warranty group – marking the first significant private equity deal to be announced since the turmoil in the financial markets began.

Candover announced today that it had increased net assets per share by 23 per cent to £18.48 per share during the six months to the end of June.

First half pre-tax profits rose to £10.6 million and Candover upped the interim dividend by 11.1 per cent to 20p. Shares rose 47p to £21.77.

Candover's chairman, Gerry Grimstone, said first half profits had been driven by several "significant" exits, including the part sale of Vetco Gray, the drilling equipment supplier, and Wellstream, which also supplies products to the oil and gas industry.

Candover bought the assets using its €2.7 billion (£1.8 billion) fund raised in 2001. Mr Buffin said that Candover had raised a further €3.5 billion in 2005 but was not currently in the fundraising market.

Candover has provisionally agreed a £150 million private placement of debt to diversify its funding sources - the first time it has issued debt.

But Mr Buffin added that falling asset prices might also represent an opportunity. It may be less attractive to sell out of existing investments at lower prices, he said, but if this meant cheap assets were available it could also be a good time to buy.

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