Risk Capital Partners, the private equity business co-founded by Luke Johnson, has raised a £75m fund and aims to cash in on opportunities thrown up by the credit crunch.

It is Risk Capital’s first institutional fund and a range of blue chip institutional investors from the US, Europe and the UK have contributed alongside Johnson and fellow founder Ben Redmond.

Risk Capital already owns UK books retailer Borders and last month bought patisserie chain Baker & Spice. Johnson believes tough trading conditions will prompt more deals.

He said: “Owing to the economic downturn, there are many distressed sellers who will be forced to dispose of attractive assets in the coming months and years.

“This, together with our focus on providing growth capital to entrepreneurs and businesses to allow them to expand, has even more relevance in the current environment as the banks are effectively closed for new business.”

Risk Capital typically seeks deals of between£10m and£50m and has backed businesses such as pizza chain Strada.