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Why Abu Dhabi Global Market is becoming the jurisdiction of choice for fund managers

8 June 2021

Daniel Pacic

Commercial Director, Intertrust Group UAE

Daniel Pacic

Commercial Director, Intertrust Group UAE

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In just five years, the fund industry’s frontier market has become one of the world’s most progressive financial centres. We are now supporting the growing number of fund managers looking to secure a presence in ADGM.

Abu Dhabi Global Market (ADGM) has quickly made a name for itself on the world stage, so it’s no wonder more and more fund managers are setting up a presence in this exciting financial centre.

A local footprint is proving invaluable. In ADGM, managers are closer to limited partners, namely Abu Dhabi’s sovereign wealth funds (SWFs), and can take advantage of the possibilities Abu Dhabi’s Al Maryah Island has to offer.

Funded by the Mubadala Investment Company, ADGM was established in 2015, helping to cement the nation’s status as a global financial centre as it shifts from being a predominantly oil-exporting economy.

According to the latest ADGM annual report, the zone is home to more than 2,932 entities, with an ever-growing list of investment funds holding $33bn in assets under management.

ADGM offers reassuring regulation, legal independence

With 60% of global GDP within a seven-hour flight, Abu Dhabi is a gateway to the new frontier markets of Southeast Asia and Africa. A major transport and logistics hub, ADGM boasts longstanding political and economic relationships with leading economies across the world.

In just over five years, ADGM has spearheaded many financial services firsts, showing its progressive mindset and far-reaching ambitions. It was one of the first financial centres outside of the UK to adopt English common law as an underlying legal framework and its court system is home to the world’s first e-courts, which hold paperless hearings.

ADGM is also an early adopter of blockchain technology and was one of the first jurisdictions to introduce a regulatory framework for spot virtual-asset (crypto) activities, including those undertaken by multilateral trading facilities, brokers, custodians, asset managers and other intermediaries.

The UAE as a whole has managed to keep corporate income tax at 0% even during the pandemic. The tax-free zone also provides other attractive benefits for general partners (GP) and limited partners (LP) such as unlimited repatriation of profits, no withholding taxes and no foreign ownership restrictions.

The ADGM ecosystem is also eager to attract and support talented fund managers. Incentives for managers operating within cost-sensitive asset classes, such as venture capital, include no share capital requirements. Alongside this fiscal flexibility, the Financial Services Regulatory Authority (FSRA), an independent regulator, offers reassurance and stability.

More fund managers are setting up ADGM operations with Intertrust Group

Intertrust Group, a regulated fund administrator and corporate service provider in ADGM, is working to prepare its clients to have the best chance at getting a seat at the negotiating table by building their presence in the region.

For example, Intertrust Group helps clients navigate new regulations, such as the requirement that all Special Purpose Vehicles (SPVs) in ADGM demonstrate an appropriate connection or ‘nexus’ to ADGM, the UAE and/or the Gulf Cooperation Council (GCC) Region.

By 12 July 2021, ADGM will also require new non-exempt SPVs to appoint a Company Service Provider (CSP) before incorporation. This will bring the jurisdiction in line with international best practice.

Our regulated presence in ADGM allows us to provide licensed trustee and fund administration services, which are in high demand.

Our services for regulated entities include authorisations, governance, compliance reporting, risk assessment, executive compensation services and fund administration. These services can all speed up the pre-approval process when a fund manager pitches to a local institutional partner for investment.

We are increasingly meeting demand for non-regulated entities through company formation, directorships and substance requirements. We also offer corporate secretarial, domiciliation and management and legal administrative services, as well as accounting, bookkeeping and payroll services.

ADGM: further growth expected

ADGM has already successfully positioned itself as an innovative and robustly regulated funds jurisdiction with a world-class fund framework.

The fund managers who come here want to operate in a regulated environment with a broad scope of talent to serve the differing needs of institutional and retail investors. They also want an efficient business environment backed by international regulatory standards. The FSRA approval and authorisation processes in ADGM are very efficient, outpacing many other established markets.

To date, we’ve witnessed impressive growth in the number of funds, ancillary advisers and operators in the ADGM financial free zone. We fully expect demand for outsourced fund administration, fund manager authorisation, governance and compliance to increase as this dynamic ecosystem continues to grow.

Why Intertrust Group?

  • Active player in the Middle East and North Africa for nearly two decades
  • Established presence in the Dubai International Financial Centre since 2011
  • Fully equipped and licensed to help clients in the internationally recognised regulated market of Abu Dhabi Global Market (ADGM), and one of the UAE’s most exciting and forward-thinking jurisdictions
  • Corporate services offer extended in 2018 to include ADGM Special Purpose Vehicles (SPVs), limited companies and foundations
  • Fully regulated presence since 2021 offering fund administration and trustee services