A leading private equity analyst has warned that the sector "was not out of the woods", despite a recent wave of capital raisings and a rally in firms' share prices, arguing that the listed private equity funds still had balance sheet problems with high levels of debt and over-commitments.

Analysts at JP Morgan Cazenove said listed private equity funds would need to raise more capital despite a recent waves of capital raisings and rising confidence in a recovery, which has seen the benchmark index the LPX Europe rally nearly 80% against a 33% rally in the FTSE World Europe since March 9. However the sector European index is down 59.8% against a 42.2% fall in the overall European index since the end of 2007.