Key Takeaways
- • London-based credit hedge fund Arini Capital Management's flagship master fund fell an estimated 7.6% in September, taking its year-to-date decline to 15.7%, according to a Financial Times report citing people familiar with the returns.
- • The master fund, which accounts for around $7.3bn of Arini's approximately $22bn in assets, has posted three consecutive monthly losses, including a decline of almost 8% in July and roughly 1% in August.
- • Arini raised $1.5bn for the flagship fund in recent weeks, including $425m at the beginning of October, with the remainder expected to be allocated by early 2027.
- • Losses trace to concentrated distressed-debt positions, including exposure to Altice International, Brightspeed and Aston Martin bonds, which have been hit by restructuring talks and asset transfers.
Summary
London-based credit hedge fund Arini Capital Management has reversed sharply this year, with its flagship strategy down almost 16% after a series of losses on debt linked to financially troubled companies, according to a Financial Times report. The FT cited unnamed people familiar with the returns as saying the master fund fell an estimated 7.6% in September, lifting its year-to-date decline to 15.7%. The master fund, which accounts for around $7.3bn of Arini's approximately $22bn in assets, has now posted three consecutive monthly losses. The strategy fell almost 8% in July and roughly 1% in August. Final September figures are expected to be determined later in the month.
The losses come even as Arini raised $1.5bn for its flagship fund in recent weeks, including $425m at the beginning of October. The remainder of the new capital is expected to be allocated by early 2027. Arini has built a reputation for concentrated investments in the debt of companies facing financial difficulties, often using leverage to amplify returns, and it also trades credit-default swaps that allow it to take positions on corporate defaults.
Several recent holdings have come under significant pressure. Arini has substantial exposure to the debt of telecommunications companies Altice International and Brightspeed. Altice International's senior bonds are trading at less than half their face value as negotiations over a potential restructuring continue, and Arini is among a group of senior creditors seeking terms that would give them a preferential recovery relative to other lenders. Brightspeed, the Apollo-backed US broadband provider, has seen its bonds and loans fall sharply as it begins discussions with creditors over a debt burden of around $10bn. Arini's Aston Martin bonds have also been hit after the luxury-car manufacturer transferred some valuable assets beyond the direct reach of creditors.
The strategy's concentrated approach has produced substantial gains in the past. According to the report, investors earned a 73% return from Arini's main hedge fund during its first four years, although the strategy has also experienced significant drawdowns before recovering as concerns about individual borrowers eased.
The losses come even as Arini raised $1.5bn for its flagship fund in recent weeks, including $425m at the beginning of October. The remainder of the new capital is expected to be allocated by early 2027. Arini has built a reputation for concentrated investments in the debt of companies facing financial difficulties, often using leverage to amplify returns, and it also trades credit-default swaps that allow it to take positions on corporate defaults.
Several recent holdings have come under significant pressure. Arini has substantial exposure to the debt of telecommunications companies Altice International and Brightspeed. Altice International's senior bonds are trading at less than half their face value as negotiations over a potential restructuring continue, and Arini is among a group of senior creditors seeking terms that would give them a preferential recovery relative to other lenders. Brightspeed, the Apollo-backed US broadband provider, has seen its bonds and loans fall sharply as it begins discussions with creditors over a debt burden of around $10bn. Arini's Aston Martin bonds have also been hit after the luxury-car manufacturer transferred some valuable assets beyond the direct reach of creditors.
The strategy's concentrated approach has produced substantial gains in the past. According to the report, investors earned a 73% return from Arini's main hedge fund during its first four years, although the strategy has also experienced significant drawdowns before recovering as concerns about individual borrowers eased.
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