Heard about the great new offer from a private equity fund near you?

It’s called an Annex Fund, and if you are quick, you may be able to get in on the ground floor, that’s if they will let you.

In fact, you may be welcomed with open arms, so long as you have a few million dollars you don’t want and are willing to “donate” the money, no questions asked, to these near charity cases.

In reality, the concept of an Annex Fund is an admission from these once high-flying masters of the universe, that their private equity model is broken and can’t be repaired at the moment.

Their investors want their money back, or will only invest on punitive terms, banks are wary about extending new funds and have enough problem loans of their own.

It’s desperate times for the likes of KKR (which has got one away, but had to give up significant rights), Apollo (which is reported to have been forced to abandon the idea ) and Cerberus, which has been told by a majority of its investors, “show us our money”.

Annex Funds are attempts from cash-strapped private equity groups to raise fresh money, which is then invested in some of the companies taken private during the boom, but that are now out of cash or need fresh capital.

That sounds legit, but the existing funds that bought these companies are broke and their investors won’t top them up with new capital.

The last thing existing investors want is for their investments to be diluted by these new funds.

But private equity groups and their companies are finding themselves short of cash, banks won’t refinance, except on very onerous terms and the companies themselves can’t be returned to the stockmarket because their financial conditions are so poor.

The big Cerberus Fund is under enormous pressure from existing investors to return their cash. It has lost heavily in the failure of Chrysler and the near collapse of 51%-owned GMAC.

The Wall Street Journal reported that investors with $US4 billion of the $US7.7 billion invested in Cerberus, want their money back. US and European media reported that rumours the fund was facing serious financial strains, were denied overnight.

Cerberus has been trying to get its investors to agree to a new fund, similar to an Annex Fund.

Last month, Cerberus chief Steve Feinberg gave his investors two choices: Move their money to a new fund, Cerberus II, in exchange for lower fees, or move their assets into a new company that will liquidate the investments over the next four years. A reported 69% of investors chose the second option. But Cerberus says it’s on the verge of creating two new funds.

The Financial Times reported that Apollo Management was forced to drop plans to raise an annex fund, after opposition from some its major investors.

But Kohlberg Kravis Roberts last month raised a 400 million euro annex fund to support its European portfolio, including ProSiebenSat.1, the German pay-TV broadcaster; Pages Jaunes, the French directories group, and NXP, the Dutch chipmaker.

The FT said it was able to raise the money because it waived its fees and allowed investors to switch from existing funds to the new one.

Apollo is under pressure because many of its investments have been hit by the recession, with one, US homewares retailer, Linen’s n’ Things collapsing. It’s now being liquidated.