Hedge fund Arini sells $800 million in debt as losses mount - WSJ

Arini Capital Management, a hedge fund with a $7 billion flagship portfolio, has recently offloaded about $800 million in debt as mounting investment losses forced margin calls from banks, according to the Wall Street Journal. This portfolio has seen more than a 20% loss this year, with additional declines anticipated by month-end.

These losses stem from concentrated bets on distressed telecommunications firms such as Altice International, Optimum Communications, Virgin Media, and Brightspeed. Optimum is reportedly nearing a potential Chapter 11 bankruptcy filing, while Brightspeed is contemplating a similar move before the end of the year.

To fulfill margin requirements tied to credit default swap indexes and other leveraged positions, Arini has been liquidating more liquid investments. These indexes track European corporate debt, which has been adversely affected by rising interest rates and concerns over France's fiscal situation. Other vulnerable assets held by the fund include luxury automaker Aston Martin, packaging company Multi-Color, and building products manufacturer Cornerstone Building Brands.

Notable exits from the fund include investments in veterinary hospital operator Pathway Vet Alliance and previous sales of positions in Intrum and Ritz-Carlton Yacht Collection. Founded by former Credit Suisse trader Hamza Lemssouguer in 2021, Arini has scaled up from a $1.3 billion specialist hedge fund to a $22 billion alternative asset manager.

Its focus on distressed debt has caught the eye of investors as credit markets face mounting pressure. About one-third of Arini's assets are placed in collateralized loan obligation funds, which continue to perform strongly. The company also recently finalized its first direct lending fund, aiming to invest around $4 billion in European middle-market ventures.

Gavin Yates, the former head of Arini's U.S. business, left the firm in August and is set to launch a distressed debt team at Citadel next year.