SVG Capital, the listed private equity fund that backs Permira, the global buyout giant, has called in investment banking advisers to conduct a strategic review of its cash-strapped business, The Times has learnt.

It is understood that JPMorgan Cazenove has started a wide-ranging review of SVG that could lead to the fund attempting to raise fresh cash in the equities markets or disposing of assets. SVG declined to comment.

SVG was floated in 1996 to give smaller investors an opportunity to invest in Permira and it invests almost exclusively in funds run by the global buyout house. It said last month it had commitments of £1.25 billion to funds run by Permira but only £1 billion of cash and bank facilities available to meet them.

Its shares have hit a ten-year low of 181p this week on fears over its debts. They closed last night at 182p, having traded at 785p at one stage this year.

Last month, it emerged that SVG had talks with Permira during which it became apparent that SVG would struggle to make its full contribution to the latest fund. This prompted Permira, whose investments include Gala Coral and Bird's Eye Igloo, to offer all its investors the opportunity to cut their payments by 40 per cent.

Permira said yesterday that it had finalised a deal with all its investors to allow them to cut payments, but the terms are punitive. Investors will have to accept a 25 per cent cut in profits from the fund, which will be redistributed to other shareholders. They will also have to pay a 2 per cent management fee to Permira over the full amount they originally committed.

Permira said yesterday that investors had “overwhelmingly” approved the reorganisation of the fund with only 10 per cent capping their payments. The buyout house said that its Permira IV fund has been cut by 13 per cent to €9.6 billion.

SVG's troubles come amid increasing problems for the private equity industry. Shares of 3i, Britain's oldest private equity group, hover at 14-year lows, depressed by speculation that it needs to raise fresh cash by buying back shares in its listed Quoted Private Equity Fund, a vehicle formed last year to invest in publicly-

quoted shares. The vehicle, which has done few deals, is effectively a cash shell, whose buyout could release £400 million of cash. 3i has denied such a move, but admitted that it had made a serious mistake by taking on so much debt.

Christopher Brown, a Cazenove analyst, warned on Tuesday that 3i, which has £1.8 billion of net debt - about half the value of its assets - needs to stop all new investments in order to be able to meet debt repayments in 2010 and 2011.

A spokesman for 3i told The Times: “The heinous sin we committed was to return £2 billion to shareholders at the top of the market rather than keeping it - that is why our gearing is so high now. But we gave the money back rather than invest it over the last three years because we believed the market was too toppy.”

3i said yesterday that it was closing its Hong Kong and Shanghai offices and transferring operations to Beijing. The private equity house said that it was not a cost-cutting measure.

Investors in private equity funds around the world have been unable to keep promises they have made to pay into the funds. Investors regularly over-subscribed in the good years, but have found that, as debt has dried up and their own investors have turned away from the asset class, they could not keep to their commitments.

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