FRM Capital Advisors, the seeding division of FRM, Man Group’s fund of hedge fund unit, has entered into a strategic relationship with a Japan-focused hedge fund.

A spokesperson for FCA confirmed to WealthBriefing that the firm will make an initial investment of $25 million in a Japanese long-short equity strategy fund launched by Arena Capital Management, a Hong Kong-based investment advisor. The fund, which was established in May 2012, focuses on domestic demand sectors and is constructed with a factor-neutral pair trading book - a strategy that, when historically correlated stocks move apart, shorts the outperforming stock and "longs" the other, hoping that the spread will eventually vanish again.

“We see this both as an opportunity to be able to generate alpha in what is traditionally a less-researched market by hedge funds, where greater inefficiencies will allow managers that do in-depth analysis to create an edge, and as an opportunity to attract assets from investors looking to allocate to pure Japanese long-short equity funds,” Patric de Gentile Williams, head of seeding at FRM, said in a statement.

De Gentile Williams went on to explain that the recent drop in the yen and newly-elected prime minister Abe’s growth-focused economic strategy has caused a substantial rally in the Japanese domestic market that may spur “meaningful investor interest”.

Arena is the first seeding deal announced by FCA since FRM was acquired by Man in May last year.