Kite Lake to Start New Hedge Fund Run by Former Tyrus Partner

Kite Lake Capital Management is preparing to start a new fund, joining peers capitalizing on investor appetite for hedge-fund products.

The new Diversified Credit Fund is set to debut in the final quarter of this year, according to a note to investors seen by Bloomberg News. The strategy, led by Kite Lake Partner Damien Regnier, will invest in a mix of liquid global credit and convertible arbitrage opportunities, the note said.

Regnier joined the firm in May from Tyrus Capital, where he was a partner and head of convertible bonds, the note added.

A representative for London-based Kite Lake, which manages $3.9 billion, declined to comment.

Kite Lake joins the likes of Kirkoswald Asset Management that are targeting new product launches amid surging demand for hedge funds. Nearly all investors surveyed by JPMorgan Capital Advisory Group in the second quarter of this year planned to either increase or maintain their allocations to hedge funds, according to the report published in September.

Founded in 2011 by Massi Khadjenouri and Jan Lernout, and co-managed by Jamie Sherman, Kite Lake’s investment strategies span merger arbitrage, equity special situations, credit and distressed debt trading.

Kite Lake’s flagship fund made 18% in 2025, and has never had a down year since its founding. The KL Special Opportunities Fund declined 0.67% in September, paring year-to-date gains to 6.26%, the note said. Merger arbitrage was the best-performing strategy last month for Kite Lake, with the Warner Bros. Discovery Inc. deal and a raised bid by Genel Energy Plc for Capricorn Energy Plc helping drive gains, while equity event, credit opportunities, and distressed delivered losses.