Candover could become the first big British private equity house to fall victim to the credit crunch. The Times has learnt that Candover is considering a plan to run itself down, cutting its investment staff from more than 50 to a skeleton crew of ten who would manage existing businesses until they can be sold.

No final decision has been made and the plan is understood to be just one of a number of options being considered by Candover’s investors, including Candover Investments, its listed arm. Sources close to the situation cautioned that it was still equally likely that Candover would decide to continue to operate, albeit with a more modest fund. A Candover official declined to comment.

Shares in Candover Investments were hammered again yesterday, closing at 108¾p, down 42 per cent.

Candover cut the value of its portfolio by half on Monday, writing off several of its biggest investments, including Gala Coral, Britain’s biggest bingo and gaming group; Ferretti, the Italian maker of luxury yachts; DX Group, the postal operator; and Hilding Anders, the Nordic bedmaker.

Ferretti broke its covenants this year and the lenders took control of the struggling business, which has been hit by plummeting demand for £1 million yachts. Candover did not participate in the restructuring and has lost £54 million on this investment alone.

Candover has put a temporary bar on new investments from its 2008 fund while it negotiates with its cash-strapped investors about its future. Candover’s listed arm is also in parallel negotiations with lenders relating to its banking covenants because it risks breaching loan-to-value covenants on its debt.

Candover, which is expected to unveil its investors’ decision about its future by the end of this month, is only one of many private equity groups that have been forced to rethink their strategies because of the disappearance of the cheap debt on which their business models relied.

SVG Capital, Permira’s listed feeder fund, said yesterday that the value of its assets had fallen by 64 per cent since last year. SVG initiated a strategic review that could lead to it slashing staff and putting its business into run-off. The listed group is also thought to be considering a plan to halt all investments in Permira or to reduce its investments substantially.

The fund’s writedowns were magnified by a deal that it did with Permira this year to cut future contributions to Permira’s current fund. Permira allowed SVG to renege on its funding commitments but it charged its listed feeder arm a financial penalty that equated to about 25 per cent of SVG’s 64 per cent asset writedowns.

SVG announced the departure of Andrew Williams, its director and the chief executive of SVG Advisers, its fund management arm.

— Warburg Pincus (WP), the private equity group, is to take a stake in Premier Foods, the Hovis and Mr Kipling group, as part of a £404 million fundraising. Premier, which has £1.4 billion of debt, is offering investors five new shares at 26p each - a discount of 9 per cent to Wednesday’s closing price - for every four they own. WP will take a minimum 10.3 per cent stake, but could end up with 20 per cent, depending on demand from existing shareholders. The debt pile is a legacy of Premier’s £1.2 billion takeover of RHM two years ago. The shares rose 6½p to 35p.

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