Henry Kravis insists that the private equity (PE) business he helped pioneer is “not dead". But for many of the buyout industry’s bigwigs assembling at the annual Super Return conference in Berlin this week, survival is not assured.

The share prices of publicly traded funds suggest their portfolios are imperilled. Credit for new deals is non-existent or prohibitively expensive. Some investors are pulling away from their commitments to the asset class. And buyout defaults are just now coming into view. PE may not be dead, but its pulse is weak.

Kravis doesn’t have to look any further than his own publicly listed fund to find supporting evidence. Kohlberg Kravis Roberts and Co. (KKR) raised $5 billion (Rs24,400 crore today) from the public market in mid-2006. The money was used to invest in KKR’s flagship funds and deals. But the Amsterdam-listed fund’s market value is now less than $500 million, and is 87% below the net asset value from its last audited quarterly statement in September.

The trouble is that most leveraged buyout (LBO) funds paid too much for companies during the boom and took on too much debt. Public market values have plunged, suggesting the equity slices buyout firms hold in portfolio companies are worth little. Many are worth even less than their debts. And things are about to get worse, with rising unemployment and slower economic growth likely for another few quarters.

Moreover, Kravis and others aren’t in a great position to capitalize on the global decline in asset prices as leverage for new deals is non-existent or too expensive. The number of buyouts has fallen 64% so far this year. Meanwhile, getting out of existing investments is equally fraught. Exit volumes are off 63% so far this year versus last.

That creates a further complication. PE investors such as university endowments and pension funds usually recycle the cash they get back from matured PE investments to continue funding new LBO deals. With the exits dried up—and cash a scarce commodity amid the decline in nearly all other asset classes—some are trying to back out of their so-called capital commitments.

Of course, just because PE feels lifeless doesn’t mean that buyout barons will give up and spend more time with their yachts. PE firms do have pools of long-term capital relative to, say, hedge funds or Wall Street investment banks. So the funds themselves won’t go away with a Lehman-like poof.

Some buyout firms may just wind down their operations over a number of years. In the meantime, some buyout pros will try to reinvent themselves as distressed debt investors. But the two investing skills aren’t perfectly interchangeable as TPG showed with its failed rescue of US thrift Washington Mutual last year. For Kravis, PE may not be dead, but he may be in the minority.