New hot spot for hedge funds? Dubai attracts more financial companies
After attracting crypto companies, real estate investors and Russian billionaires, Dubai is attracting a new audience: hedge fund managers.
Izzy Englander’s Millennium Management has grown its staff at Dubai International Financial Center to around 30 since obtaining a license in 2020. Michael Gelband’s ExodusPoint Capital Management, one of the world’s largest multi-strategy hedge funds , registered at the DIFC in June, according to a filing.
All Blue Capital has moved from its London headquarters to the city, where it now has nearly half of its global staff. Michael Platt’s private investment firm BlueCrest Capital Management is also expanding into the emirate, with former Citadel fund manager Chris Wheeler among those hired.
They are among a growing number of businesses choosing to expand into the sunny business hub. Brexit prompted many funds to seek new bases outside the City of London, while some traders fled Hong Kong’s strict Covid restrictions. And with the cost of living skyrocketing around the world, Dubai’s tax-free welcome mat has rarely looked so appealing.
“We are in a unique situation where traditional financial centers are disintegrating,” said Tom Kirchmaier, professor at the Center for Economic Performance at the London School of Economics. “Living in Dubai – it now comes down to personal preference with low taxes, good infrastructure and low regulation.”
For relocating fund managers, the city offers fertile ground for high net worth individuals and institutional investors. The UAE is expected to attract a net inflow of 4,000 millionaires this year, the most of any country in the world, according to consultancy Henley & Partners.
Rising oil prices are another draw. Crude above $100 a barrel is boosting Gulf economies and markets, prompting the region’s sovereign wealth funds to invest the windfall at home and abroad.
“It’s no coincidence that you have a lot of asset managers, hedge funds and other institutional investors who have moved or set up offices in the region here,” said Arshad Ghafur, chairman of Bank of America. for the Middle East and North Africa. DIFC Fintech Week. “It’s to really capitalize on what’s going on here.”
Dubai’s current effort to attract financiers is not the first. Private bank Mirabaud predicted a regional hedge fund boom in 2008 that failed to materialize after the financial crisis wreaked havoc on the industry and a series of scandals damaged the UAE’s regulatory reputation . Some hedge funds have come and gone. Argent Financial Group received a license to operate in the DIFC in 2006 but withdrew three years later. DE Shaw moved to the emirate in 2009 but has since left.
The latest push includes a new list of incentives. The Dubai International Financial Center offers reduced license fees and capital requirements for domestically domiciled hedge funds.
Companies in the center manage about $450 billion in assets, according to DIFC Authority CEO Arif Amiri. A business center team recently completed a roadshow in San Francisco and New York to attract more business.
“During our recent roadshow in the US, we engaged with some of the largest hedge funds in the world,” Amiri said. “The pandemic broke the conceptual relationship between ‘what’ you do and ‘where’ you do it. Once that happened, cities like Dubai became exceptionally competitive on a global scale.
The incentives appear to be having an impact even as other cities, including Paris, also try to attract traders. Millennium, which manages about $55 billion in assets, is actively looking to expand its presence in Dubai, according to people familiar with the matter. He has hired Dean Cooper from UBS Group AG, who will move to Dubai from London as the firm expands its emerging markets operations there, people familiar with the matter said.
BlueCrest, which manages Platt’s assets and those of its partners, is expanding to 10 people, including at least three portfolio managers, according to people familiar with the matter. The company plans to open an office in the financial district and start trading imminently, said the people, who asked not to be identified as the details are private.
Carrhae Capital, a London-based hedge fund, is in the process of opening an office in Dubai and is currently seeking regulatory approvals, according to a person familiar with the matter. The firm, which manages approximately $800 million, will move two investment professionals to the city and the decision is primarily driven by the time zone advantage the firm will gain for its research and dealings focused on emerging markets, added the person.
Dubai in recent months has taken steps to attract foreign talent just as rigid Covid-19 rules and the growing influence of mainland China diminish the appeal of Hong Kong, which has lost thousands of professionals to other centers.
“It makes sense with the shutdowns in Asia that financial centers like Dubai are becoming a destination for hedge funds,” said Whitney Baker, founder of New York-based Totem Macro and former head of emerging markets at Bridgewater Associates.
The Hong Kong Investment Funds Association, which represents companies with more than $52 billion in assets under management, last month called on the city to scrap quarantine rules for travelers and open up to the rest of the world to restore its status as an international financial centre. .
Stricter visa requirements, hiring restrictions and other bureaucratic roadblocks also limit Singapore’s appeal to fund managers. The country has also made it harder for wealthy foreigners to set up family offices, raising the minimum bar for local assets under management and other requirements for obtaining key tax benefits.