Arena holds first close on fund of $215m, sources say

The manager expects the final close of the special situations fund before year-end.

Arena Investors held its first closing on Arena Special Opportunities Partners II, LP at $215 million in early July, sources close to the manager say. The firm itself declined comment.

The fund is targeting $750 million, with a final close expected on or before 1 December, according to the sources.

The predecessor fund, Arena Special Opportunities Partners I fund, LP, closed in December 2020 at $519 million, far surpassing its target of $300 million. It has achieved an internal rate of return of about 25 percent in its first 15 months, according to the sources. That fund, which was fully invested early this year, has a target return of 10-12 percent, which is also the target for the latest fund.

Arena’s Special Opportunities Partners Funds originate all the loans; they invest in special-situations, asset-backed, credit-oriented investments. The funds have a flexible, global mandate, with an emphasis on diversification and a deep margin of safety investments where the value can be crystallised through structures that are typically short duration, senior secured and with tight covenants.

Arena’s investment approach has produced consistent, attractive returns despite the volatility and uncertainty of the past year. Through its new funds, the firm will continue to seek to identify attractive investment opportunities that generate high returns with lower risks. Borrowers include outfits that are not the direct beneficiary of all the liquidity and money printing that has occurred since the onset of the pandemic, the sources said.

Arena, based in New York, had $2.6 billion under management as of 18 June 2021.