SVG Capital is in talks to scale back payments to Permira, its parent, as concerns grow that the private equity industry is facing a funding crisis.

It is understood that SVG has asked Permira, a private equity firm that specialises in leveraged buyouts, to renegotiate contracts that oblige SVG to fund it for the next five years, reduce the payments or reschedule them over a longer period.

SVG, which is listed, is believed to be only one of a large number of private equity investors that will try to renegotiate payments that they have promised to make to buyout houses.

The future of the private equity business model has been a subject of debate as cheap debt to finance takeovers has dried up.

As of last week SVG had commitments of £1.25 billion to pay to Permira and others but only £1 billion of cash and bank facilities available to meet them. SVG declined to comment, but a source close to the fund said that the attempts to renegotiate payments were a sensible precaution.

A Permira spokesman said: “We have been having discussions with many of our investors about the state of the market.”

While presenting its results last week, SVG revealed that Permira was “examining ways in which they can assist their investors”. However, its own listed unit appears to be its biggest concern. One private equity professional said: “Some investors have overcommitted to funds.”

Last month the bosses of Carlyle, the US private equity house, pleaded with investors not to default on their payments. “Please don’t default,” David Rubenstein, a Carlyle co-founder, said on a conference call. “We will try to work with you.”

Returns from private equity houses have also dried up because they cannot sell their portfolio companies and, therefore, cannot return money to investors. Many investors had banked on profit distributions to fund their next round of contributions to private equity.

Unlike hedge funds, private equity houses do not have to return money to investors on demand and can, theoretically, force their investors to stick by commitments to give them money. However, it is unclear what the buyout houses could do if faced with a wave of defaults from investors who simply cannot pay.

In the case of SVG, Permira is likely to help its listed fund as far as it can because the buyout house has a crossholding of shares in SVG, whose share price would be hit if it were held to its commitments.

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