Arini Flagship Fund Falls 16% on Troubled-Debt Losses

Arini Capital Management’s flagship fund fell 15.7% this year through September after losses on debt linked to troubled companies, including Altice International, Brightspeed and Aston Martin, according to people familiar with its returns.

The fund fell an estimated 7.6% in September, marking its third consecutive monthly decline. It dropped almost 8% in July and about 1% in August. Final September figures are expected later this month.

The fund manages about $7.3 billion and accounts for part of Arini’s roughly $22 billion in assets. The London-based firm invests in credit, focusing on debt issued by companies facing financial pressure. It also trades credit-default swaps, which allow investors to bet on whether a company will default.

Arini has substantial exposure to debt issued by Altice International, a telecommunications company negotiating a possible restructuring. The company’s senior bonds are trading at less than half their face value. Arini is among senior creditors seeking repayment terms that would provide a higher recovery than other lenders.

Bonds and loans issued by Brightspeed, a U.S. broadband provider backed by Apollo Global Management, have also declined. The company has begun discussions with creditors over how to address about $10 billion of debt.

Arini’s Aston Martin bond holdings came under pressure after the luxury-car maker transferred some assets beyond the direct reach of creditors. The transfer reduced the assets available to lenders if the company faces financial difficulties.

The losses followed Arini’s recent fundraising for the flagship strategy. The firm raised $1.5 billion in recent weeks, including $425 million at the beginning of October. The remaining capital is expected to be allocated by early 2027.

Investors earned a 73% return from Arini’s main hedge fund during its first four years. The strategy has also suffered large declines before recovering when concerns over individual borrowers eased. Arini declined to comment.