Jon Moulton, trenchant-spoken head of private equity group Alchemy Partners, is chasing a £100 million-plus deal with a ‘big brand name company’ among a range of projects in a market that he declares ‘now presents opportunities not seen since the early 1990s’. The company backer, whose thwarted attempt to take over the Rover car group now looks amply vindicated, says he sees a ‘relative flood of deals’, especially in the distressed debt market.

Here there is now ‘an excess of opportunities’ for those able to buy over-borrowed but intrinsically sound companies’ debt and then acquire the companies themselves by swapping it for equity. With Lehman Brothers alone offering ‘$128 billion of distressed debt’, it will be ‘available on a scale not seen before’, argues Moulton, adding, ‘we are labouring on Lehman Brothers debt, not the top companies but small entities, in Guernsey or places like that’.

‘Lots of investors are coming to us,’ comments Moulton, who suggests the present financial impasse could last anything from ‘soon to three years’. He says ‘the distressed debt funds moved too soon, but now they will do well’ and foresees ‘prime pickings’ in the autumn of next year.

Moulton concedes that Alchemy’s own portfolio has ‘not been immune’ from the ravages of the credit crunch and recession. ‘If I have a competitive edge, it is simply because I’ve seen it before.’

Even so, Moulton suggests today’s complete lack of trust in the banks is unprecedented – and well deserved. In the absence of liquidity and leverage, he concludes private equity companies ‘must learn to be good at management’ and accept ‘lower rates of return’.

Moulton advocates a return to ‘narrow banks’, devoted to traditional deposit taking and lending and driven by relationships with customers, not transactions. New regulation is inevitable, but he fears it will defeat itself by complexity.

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