Arini sells $800M in debt as Pimco, Oaktree place bids

Arini Capital Management, the London credit hedge fund founded by star trader Hamza Lemssouguer, has sold about $800 million of debt assets in recent weeks. The sales came partly in response to margin calls from the banks it works with, according to people familiar with the matter cited by The Wall Street Journal. The selling marks a sharp reversal for a firm known for large, leveraged bets on distressed companies. It is also a test of how much stress the riskiest part of Europe's junk-debt market can take.wsj.com

Pimco and Oaktree circle

Asset managers including Pimco Allianz SE and Oaktree Capital Management have bid on some of Arini's high-yield holdings, Bloomberg reported on Friday, October 30. Arini has already sold some of its positions in large speculative-grade companies. Dealers are talking with prospective buyers about selling more, according to people who asked not to be named because the talks are private.bloomberg.com

A worsening October

The losses have picked up speed this month. Arini's flagship fund managed $7.5 billion at the end of July. It was down 12% for October through Oct. 23 and about 26% for the year, according to Bloomberg. An earlier investor memo showed the master fund lost 6.9% in the first half of October, after a 15.7% decline through September.news.bloomberglaw.com+1

The damage comes mostly from concentrated distressed positions in telecom groups Altice International and Brightspeed and in British carmaker Aston Martin. Prices of all three companies' securities have kept falling amid concerns about possible restructurings. The wider market has been hard on similar funds. Bloomberg described a "total meltdown" in the lowest-rated debt, which has also hurt rival Sona Asset Management.hedgeweek.com+1

Investors still committing cash

The selling comes only weeks after Arini raised $1.5 billion for its Arini Credit strategy. More than $400 million of that money was allocated in early October, and the rest is due by February. Lemssouguer, a former Credit Suisse trader, founded Arini in 2021. It grew to about $22 billion in assets across its strategies.alpha-maven.com+1

In an investor letter, Lemssouguer compared the slump to early 2024. The fund fell about 8% over two months that year and then finished up 20.8%. The firm has told clients the paper losses do not mean its investment thesis has failed. "We do not believe it is an indicator of soured investments, but rather part of the process – being contrarian is a necessary condition for this opportunity set," Arini wrote.briefs.co+1