Shares in SVG Capital, the listed private equity fund that backs Permira, the global buyout giant, plunged more than 27 per cent today after it announced it will raise £200 million through a discounted share issue in a bid to bolster its battered balance sheet.

The fundraising announced this morning will also see SVG cap its original commitment to the Permira IV fund at 60 per cent, reducing the total investment it was due to stump up in so-called uncalled commitments by £796 million to £344 million.

SVG revealed it is writing down the value of its investment portfolio by 40 per cent to reflect the current market and said that it had renegotiated covenants with its senior lending banks.

Shares in the firm fell 27.4 per cent, or 50p, to 132p in early trading.

The £200 million share issue, on which it is being advised by JPMorgan Cazenove and Key Capital Investment Management, has been pitched at 100p a share, a 45 per cent discount to yesterday's closing price of 182p.

Up to £139 million of the amount will be raised from existing sharholders via a 1-for-1 rights issue, with the balance coming from a placing partly underwritten by JP Morgan Securities.

SVG said that shareholders speaking for 48 per cent of its shares had undertaken to take up their entitlement in the 1-for-1 rights issue.

Nicholas Ferguson, chairman of SVG, said: "This comprehensive package of measures will provide our shareholders with increased certainty against very turbulent market conditions.

"By raising this additional capital, increasing the borrowing headroom under our financial covenants and capping our commitment to Permira IV, we will transform our balance sheet and put ourselves in a strong position to steer through these uncertain times."

The announcement follows the revelation in The Times today that SVG had called in JPMorgan Cazenove to conduct a strategic review of its cash-strapped business.

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 this week on fears over its debts. They closed last night at 182p, having traded at 785p at one stage this year.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts