Hamza Lemssouguer’s Arini Capital Management opened its credit trading strategy to new cash after two years even as the firm’s main hedge fund suffered losses for five consecutive months amid widespread market dislocation.
The London-based firm raised $1.5 billion for Arini Credit strategy, according to a person with knowledge of the matter. More than $400 million of the new capital was allocated at the start of this month with the rest set to come through February.
The hedge fund lost an estimated 5.6% in September, worsening its decline this year to 13.5%, the person said, asking not to be identified because the details are private. That compares with the average gain of 3.9% through August at credit hedge funds tracked by Bloomberg.
Coming amid these losses, the fundraising signals investor appetite for hedge funds, especially big-name traders at a time when most of the industry’s major players aren’t accepting new cash. Diego Megia’s macro hedge fund raised $1.75 billion in fresh capital earlier this year after losses in March.
Credit traders have faced a period of volatility as widening spreads at the weaker end of the market have pressured companies in need of refinancing. The gap between the relatively risky and riskiest ends of the junk-rated credit spectrum hit an all-time high in September, according to Bloomberg-compiled data. This is due to a growing distinction investors see between healthier, better-rated high-yield names — which can access capital markets for their refinancing needs — and CCC-rated borrowers, considered more vulnerable to default risks.
While Arini has largely avoided trades linked to First Brands and the software sector and made money on Altice France, it has seen mark-to-market losses on other bets. Its wagers include debt collector Lowell, which struck a restructuring agreement in August that will see creditors led by Arini take over the firm, as well as communications firm Altice International , whose bonds have kept plunging over the last few months as the company faces nearing maturities.
The main credit strategy at Arini, which is known for its high-conviction bets marked by big swings in gains and losses, managed $7.6 billion at the end of August and has been shut to fresh capital since 2024.
A representative for Arini declined to comment.
In his latest letter to investors, Lemssouguer compared his recent losses with markets he faced during the first half of 2024. At the time, the fund lost about 8% in two months, then used the volatility to add to its bets and ended the year up 20.8%, according to the letter.
“It is the same playbook we are running today and mark-to-market volatility is embedded in how this strategy generates returns,” Lemssouguer wrote.
Lemssouguer, 36, is one of the closely watched credit traders in Europe. He made a name for himself at Credit Suisse with stellar returns from high-conviction bets on high-yield debt and credit default swaps. During his time at the Swiss lender, the Moroccan-born trader generated a gross annualized return of 38%, including 81% in 2019 and 44% in 2020, Bloomberg News has reported.
Arini, which is named after the parrots Lemssouguer breeds, has grown into a $21.7 billion credit-trading specialist after starting out at $1 billion in 2022.