Japan-Focused Hedge Fund Arena Capital Shuts Down
Arena Capital founder Toby Bartlett to join Hong Kong’s Lim Advisors
Toby Bartlett last month closed down his Hong Kong-based Arena Capital Management Ltd. and returned money to investors, according to a person familiar with the matter. The fund, which focused on the consumer sector, was set up in mid-2012 and had roughly $50 million under management when it was closed, the person said.
Hedge funds, which tout their ability to make money in good times and bad, have long had a low rate of survival. Smaller fund operators though are facing an even greater challenge with regulatory costs on the rise and large investors more insistent that funds put in place sophisticated operations before they make an investment.
“Investors are demanding more from potential early stage partners, including a solid pedigree, a track record of success running a similar strategy (preferably with the same team), strong operational experience, and sound business management skills,” Deutsche Bank AG said this month in its annual survey of hedge-fund investors. Nearly a third of respondents that said they are willing to invest in a hedge fund within its first six months also said they would require the fund to have an average $175 million under management.
Mr. Bartlett previously worked as a portfolio manager at J.P. Morgan Chase & Co.-owned Highbridge Capital Management in Hong Kong and Citadel Investment Group in Japan. He will join George Long ’s Lim Advisors Ltd. in Hong Kong in early April, bringing with him a team of two analysts, Ayumu Kuroda and Yukimi Oda, who will work in Lim’s Hong Kong and Tokyo offices respectively, the person said.
Founded by Mr. Long in 1995, Lim is one of the region’s oldest hedge-fund operators with a history that predates the late-90’s Asian financial crisis. The $2 billion firm principally manages credit and stock strategies and has historically dedicated a significant share of its assets toward investments in Japan, including through a stand-alone Japan fund.
“Toby brings deep experience, broadening Lim’s Japan investment resources,” said Matthew Whitehead, Lim’s head of investor relations. “We expect Japan to continue to provide great opportunities for alpha strategies and the appointments will help Lim take advantage of these to generate higher returns for our investors.”
Hedge funds investing in Asia excluding Japan outperformed their global peers for the third straight year in 2014, with funds tracked by data provider Eurekahedge posting an average 9.4% return. Returns for Japan-focused funds were more muted with a 6.2% return, matching North American fund returns and exceeding a 1.2% gain for European funds.
Investors have taken note. Thirty-percent of respondents in the Deutsche survey said they plan to increase investments in Asian managers over the next 12 months, a sharp jump from 19% with those plans last year.
A unit of U.K.-based hedge-fund manager Man Group PLC in early 2013 announced what is known as a “seed deal” with Arena, an agreement where investors provide starter capital to new hedge funds in exchange for a portion of their fees. A spokeswoman for Man Group on Monday didn’t reply to a request for comment on the relationship.