London credit investor Arini Capital Management’s flagship fund has suffered losses of almost 16 per cent this year, after enduring a string of soured bets on the debt of financially troubled companies.
Arini, one of Europe’s fastest-growing credit hedge funds, experienced estimated losses of 7.6 per cent in September in its master fund, according to people familiar with its returns, taking its year-to-date losses to 15.7 per cent. Final performance figures for September will be determined later this month.
September was the third consecutive month of losses for the largest fund of the $22bn-in-assets credit specialist, after it shed almost 8 per cent in July and close to 1 per cent in August. Arini’s master fund accounts for around $7.3bn of its assets, according to a person familiar with the matter.
Arini, which in little over five years has grown into one of Europe’s most prominent players in the market for higher-risk corporate debt, has become ensnared in several situations where lenders are braced for potentially large losses in restructuring negotiations.
In recent weeks Arini raised $1.5bn for its flagship fund, with $425mn coming at the beginning of this month. The remainder is to be allocated by early 2027.
Arini has large positions in the debt of struggling telecommunications companies Altice International and Brightspeed, as well as owning Aston Martin bonds that suffered when the British luxury-car maker moved some of its most valuable assets out of creditors’ reach.
Top-ranking bonds at Altice International are now trading at less than half of their face value, as bruising restructuring negotiations continue with the group’s owner, Franco-Israeli billionaire Patrick Drahi.
Arini is part of a subset of senior creditors that are pushing for a deal that would give them a preferential payout compared with their peers in any restructuring, however, with some trading desks at banks quoting bonds held by this group at higher prices.
Bonds and loans at Apollo-backed Brightspeed have continued to crater in value over the past month, as the high-speed internet provider has begun negotiations with creditors about ways to tackle its $10bn debt pile.
Hamza Lemssouguer, a 36-year-old former star trader at Credit Suisse who established Arini in 2021, has developed a reputation for taking concentrated bets on the debt of troubled companies and employing leverage to boost potential returns.
Arini, which is named after a type of parrot the Moroccan-born hedge fund manager breeds, is also known for trading credit-default swaps (CDS), a type of derivative that allows investors to bet on whether a company will fail to honour its debts.
The hedge fund’s high-octane strategy has previously yielded outsized returns for its investors, earning them a return of 73 per cent over its first four years.
Arini’s main hedge fund strategy has also suffered major losses in previous years, before going on to rebound as market jitters over the health of the companies it has backed have subsided.
Alongside its flagship fund, Arini runs other smaller strategies where performance this year has been better.
Arini declined to comment.