Hedge Fund Boom Pushes Dubai Finance Hub Past the 100-Firm Mark
(Bloomberg) — The number of hedge funds registered in Dubai’s financial hub has doubled since the beginning of last year to more than 100; this underlines the city’s rapid rise as an emerging global hub for industry.
Dubai International Financial Center has become home to 102 hedge funds with the arrival of firms such as Oak Hill Advisors, which has approximately $108 billion in assets under management. Nearly 80 percent of hedge funds in the DIFC manage assets above $1 billion, according to a statement on Monday.
During this year, companies such as Baron Capital Management, BlueCrest Capital, Silver Point Capital and Welwing Capital Group have registered with DIFC, joining giants such as Millennium Management and ExodusPoint Capital Management that already have a presence in the city.
The rise extends beyond hedge funds. The DIFC plans to increase the number of wealth and asset management companies to 500, from about 350 at the beginning of last year, according to a person familiar with the matter. Growth has been fueled by more than 1,250 family-linked business establishments in the centre, and the United Arab Emirates’ growing appeal among relocating millionaires.
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Dubai has become a magnet for hedge funds thanks to its tax-free income, year-round sunshine and time zone that allows trading in Asian and European markets. Neighboring Abu Dhabi is also expanding rapidly; Marshall Wace and Arini opened offices there last year.
Access to the UAE’s vast pools of capital remains a key attraction. Abu Dhabi offers state wealth close to $1.8 trillion, while Dubai is home to family offices that control more than $1 trillion. Companies also offer postings in the Gulf as an advantage to recruit and retain talent. Some managers prefer both cities instead of choosing between them.
Yet the UAE hedge fund landscape remains dominated by secondary offices and is far from competitive with established centres. New York, for example, is home to more than 1,500 hedge fund headquarters, while Hong Kong and London each have over 300, according to Preqin data.
Despite this, the Gulf country is gaining momentum, including as a launch pad for start-ups. At least five portfolio managers from leading global hedge funds are starting their own firms here, Bloomberg News reported last week.
Authorities are responding to this increase. Dubai is building three new towers at DIFC and retrofitting another to accommodate hedge fund start-ups. The city is also considering major regulatory changes to attract more executives, Bloomberg News reported.
A similar influx of firms in Abu Dhabi helped the number of operational establishments in the financial hub ADGM rise 43% year-on-year to 3,227 in the third quarter. Last week, officials announced plans to spend at least $16 billion to add offices, luxury homes and retail space.
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