Gary Klesch, the distressed debt specialist, who is about to launch a new debt fund, has denied claims that his private equity turnaround fund is under water with write-offs running as high as 40%.

The £80m (€129m) Klesch Capital Partners was launched in 1998 in a blaze of publicity. His private equity fund was to introduce his debt philosophy to equity investing by buying firms cheaply out of receivership and turning them around.