In the latest of our ‘Under the Spotlight’ articles Sam provides his thoughts on the development of Abu Dhabi Global Markets (ADGM) as a new and emerging funds jurisdiction.
ADGM is a new and unfamiliar funds jurisdiction for many. How has its fund industry evolved in the short time since it was established? What types of funds are being established, and where are the promoters mainly coming from?
ADGM has built a strong reputation as being a robust, progressive and responsive jurisdiction in which to do business since opening for business in late October 2015. As with all new jurisdictions, it takes time to develop a track record and investor confidence. However, a number of funds have been established in ADGM since inception. These funds cover an array of asset classes including real estate and private equity. We have seen a particular interest in venture capital technology-focused funds. Promoters are global with some big-name institutions setting up offices in ADGM.
Do you see ADGM developing particular niches with its fund industry?
At the moment, the key for ADGM is to be a robust, nimble, responsive and progressive jurisdiction that is looking to work in collaboration with investment managers and associated parties to ensure the smooth establishment of fund structures and the ongoing running of these structures. The jurisdiction offers a number of attractive regimes for key asset classes.
Within the UAE and wider Gulf Cooperation Council (GCC), it is clear there is a need to diversify away from the region being entirely dependent on oil revenues. To what extent do you see ADGM playing a role in achieving that diversification?
ADGM is seen as a key catalyst for growth in the region, delivering value to its clients and its peers while contributing to Abu Dhabi’s ambitious growth plan and strategy. The progress ADGM has made in a short time period since its inception demonstrates the potential impact it can have on growth in the region.
How strong are the supporting services for the fund industry in ADGM and in Abu Dhabi generally?
For such a young jurisdiction, businesses have seen real growth potential and have subsequently set up offices and committed to the jurisdiction. There is a strong number of legal advisors located in ADGM and we would expect to see the number of service providers to grow as the jurisdiction matures and builds a track record. PraxisIFM was the first regulated fund administrator in ADGM and we are very excited to have been part of the growth at such an early stage.
To what extent is the fund administration itself being carried out from within ADGM, or is most of it being carried out from other fund administration jurisdictions?
We currently employ 11 people in our ADGM office, a number of who are involved with our fund operation. Front office and company secretarial services are provided by our ADGM team with the back office administration outsourced to our Guernsey office. As the jurisdiction grows and we expand as an office, we expect to undertake further fund administration services from within ADGM.
Do you see ADGM funds being used as ‘feeder funds’ for gathering GCC institutional capital to be deployed in investing into other parts of the world to take advantage of current opportunities to acquire real estate and business at discounted prices? Or do you think they will still veer towards using the Cayman Islands feeder funds as the default?
I think we are going to continue seeing parallel vehicles being established, whereby ADGM structures are used to attract GCC capital and the Cayman Islands or similar being used for global investors. As with every jurisdiction in its infancy, it takes time to build a track record and to gain global investor confidence, therefore it is likely we will see parallel structures for the time being.
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