SVG Capital, the listed private-equity fund that backs Permira, today went cap in hand to shareholders for funds, and warned the value of its investments have plunged 40% in the last six months.

It announced plans to raise £200 million through a hugely discounted rights issue and share placing, and at the same time took a £470 million hit to its £1.3 billion investment portfolio, the vast majority of which is held through Permira.

SVG also capped its original commitments to the Permira IV fund at 60%, which therefore means it no longer has to invest as much money as it first intended.

The shake-up, engineered by adviser JPMorgan Cazenove, underlined the crisis facing the buyout industry as assets tumble in value, the cost of what little debt is available rockets and share prices crash.

SVG shares tanked 39p, or 21%, to an all-time low of 143p today, having traded as high as 785p earlier this year. The rights issue was launched at 100p a share.

Chairman Nicholas Ferguson said: "We are in a very major financial storm with very strong falls in markets prices and a deteriorating economic situation. The board of SVG has decided to grasp the nettle and put our balance sheet on a very firm footing.

"It is quite radical but we live in radically changed times, and the board decided we had to be proactive to make sure the company is on a sound footing.

"This comprehensive package of measures will provide our shareholders with increased certainty against very turbulent market conditions."

SVG, which is based in the Strand in central London, was floated in 1996 to give smaller investors an opportunity to invest in private-equity giant Permira, which is led by Damon Buffini, who became a hate figure for trade unions at the peak of the buyout boom two years ago amid allegations of asset-stripping.

Ferguson also caused a stir last year when he criticised the rules on capital gains tax, warning that some City executives pay "less tax than a cleaning lady".

SVG has committed more than £3 billion to private-equity funds since its listing, the vast majority of it with Permira, but has hit trouble since the onset of the credit crunch, which brought the buyout boom crashing to a standstill.

It took a provision of 40% against the valuation of its investment portfolio, which stood at £1.3 billion on 30 June. The £470 million hit, although not an official valuation of Permira investments, was seen as a key indicator of how badly burned Permira and other private-equity firms have been. Permira investments include Gala Coral and Birds Eye.

SVG also took full advantage of Permira's offer to cut payments to the Permira IV fund after it became clear investors would struggle to make full contributions.

SVG had originally agreed to put £2 billion into the fund, and today announced that it would reduce outstanding payments from £796.3 million to £343.8 million.

However, SVG will have to accept a 25% cut in profits from the fund.

SVG also launched a heavily discounted rights issue at 100p a share, some 45% below last night's closing price of 182p, to "strengthen the company's balance sheet in challenging market conditions".