Solomon Owayda, who oversees €4.4bn of private equity investments at SVG said at a conference in London that "I am going to have a hard time when someone is trying to raise their third or fourth fund and it’s going to be $4bn or $5bn and they still want to charge 2 per cent."

His comment is an admission that private equity fees seem unacceptably high.

However he, like many others, is missing the point. Raising money from cash-strapped investors will not be easier with lowered fees. What investors are looking for is a sustainable business model that can produce positive results over the long term. Instead of concentrating on fees, Mr. Owayda should reflect on investments his firm has made and focus on future investments.

Many investors now realize that large parts of the private equity boom had nothing to do with fundamentals and more to do with access to financing. Unless this view changes, private equity groups will have a hard time raising money in the future - even with drastically reduced fees.

AM