Arini's YTD losses exceed 21% as distressed bets deteriorate

London-based credit hedge fund Arini Capital Management reported a significant decline in October, causing its flagship strategy to lose over 21% of its value this year, according to a Financial Times report. The $7 billion master fund dwindled by an estimated 6.91% between the beginning of October and the end of last week, following a 15.7% dip in the first nine months of 2026.

This marks one of the most severe drawdowns among major credit hedge funds this year. Arini, founded in 2021 by former Credit Suisse trader Hamza Lemssouguer, has quickly expanded to manage around $22 billion, drawing investments from sovereign wealth funds and institutional investors due to its strong performance in prior years.

The recent losses are primarily attributed to concentrated positions in distressed corporate debt, encompassing bonds and loans from telecommunications firms Altice International and Brightspeed, as well as Aston Martin, a British luxury-car manufacturer. Securities issued by these companies have continued to depreciate in secondary markets this month, driven by apprehensions about prospective restructurings.

Arini also possesses a smaller stake in German property firm Adler, whose bonds have plummeted below 60 cents per euro after Berlin's political leaders proposed nationalizing assets held by large landlords.

Notwithstanding the flagship fund's slump, Arini's asset-backed lending and private credit strategies have outperformed. The company unveiled its inaugural direct lending fund this week, operated through a strategic sourcing partnership with Lazard and earmarked for over $4 billion in investments. Furthermore, Arini has secured $1.5 billion in new commitments for its flagship strategy, including $425 million allocated in early October, with the remainder anticipated to be deployed by early 2027.

The firm endeavors to allay investor apprehensions by asserting that the current mark-to-market losses do not indicate a deterioration in its underlying investment strategy, viewing them as part of the process – being contrarian is essential for these investment opportunities, according to Arini in a letter to investors. The manager has also provided clients with additional insights into its valuation methodology, liquidity profile, and internal risk controls to address concerns over the flagship fund's performance.