Abu Dhabi has successfully established itself as a thriving hub for hedge funds, attracting prominent names like Brevan Howard Asset Management and Marshall Wace. Now, a new wave of influential investment firms, predominantly from Asia, are setting their sights on the burgeoning financial center.
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Hillhouse Investment Management and CPE (formerly Citic Private Equity) are reportedly in preliminary discussions to establish offices in Abu Dhabi. This aligns with the anticipation of ADGM, Abu Dhabi’s financial free zone, that two major Asian private equity firms will soon set up shop in the city.
This influx of Asian investment companies underscores the growing appeal of the United Arab Emirates. Deep-pocketed sovereign wealth funds, a tax-free environment, and advantageous time zones position Abu Dhabi and Dubai as compelling alternatives to established financial centers like London and Hong Kong.
Abu Dhabi’s Allure for Global Investors
Paul Marshall, co-founder of Marshall Wace, lauded Abu Dhabi’s attractive investment landscape at the city’s annual financial conference. He highlighted the city’s tax benefits and officially opened Marshall Wace’s new Abu Dhabi office.
Abu Dhabi’s success in attracting investment firms is mirrored by similar efforts in Dubai. The Dubai International Financial Center (DIFC) recently collaborated with the Alternative Investment Management Association to host executives from Chinese wealth and asset management firms, aiming to encourage expansion into the region. The hedge fund industry in Dubai has already surpassed 1,000 employees, bolstered by the presence of firms like Millennium Management. Recent months have seen the establishment of offices by prominent Asian firms like Dymon Asia Capital and Alp Ercil’s Asia Research & Capital Management in Dubai. The DIFC confirms a surge in interest from Chinese companies in 2024.
UAE: A Strategic Gateway to Emerging Markets
The UAE’s strong ties with China, its largest trading partner since 2020, contribute to its appeal for Asian firms. Dubai and Abu Dhabi are viewed as strategic gateways to access lucrative markets like India.
The UAE’s substantial capital reserves, managed by sovereign wealth funds in Abu Dhabi (nearly $1.7 trillion) and family offices in Dubai ($1.2 trillion), further enhance its attractiveness.
Challenges and Opportunities in a Growing Market
Despite the UAE’s successes, the burgeoning financial industry faces challenges. A significant portion of invested capital is still deployed overseas due to the relatively limited investment opportunities within the Middle East. The shelving of a planned investment venture between Ray Dalio and Abu Dhabi’s G42 serves as a reminder of the complexities involved. Additionally, much of the infrastructure and skilled workforce remain concentrated in established financial centers like London and New York.
Building a Thriving Financial Ecosystem
Nevertheless, a growing community of hedge fund managers and institutional investors is taking root in the UAE. Networking events are proliferating, fostering connections and knowledge sharing. The “Side Hustle Crew” in Abu Dhabi, a 350-member social club, exemplifies this trend. Major financial institutions like Morgan Stanley, Goldman Sachs, and JPMorgan Chase are also organizing annual events in the region, solidifying the UAE’s position on the global financial map. The increasing presence of high-net-worth individuals and investment professionals underscores the UAE’s transformation into a vibrant financial hub. As Bhaskar Dasgupta, a family office manager in Abu Dhabi, observes, the concentration of financial power in the city is palpable.
