The credit crunch has cut off a big source of profits for private equity groups in Europe this year by shutting down the option for them to add new debt to companies they own solely to pay themselves a dividend.

According to S&P LCD, the market information service, such deals, known as dividend recaps, made up almost one fifth of the €118.4bn ($185.3bn) in new borrowing by private equity owned companies in Europe in the first half of last year.