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In an editorial published recently, Bloomberg has dubbed Abu Dhabi “the newest wealth haven by billionaires”, primarily noting a significant surge in capital pouring into the emirate.
According to the editorial, Abu Dhabi’s attractiveness to high-net-worth individuals stems from its Special Purpose Vehicles (SPVs). Per the definition provided by Bloomberg, SPVs are separate legal entities that are commonly utilized by high net worth individuals seeking to isolate their financial risk; they are essentially holding companies that manage wealth.
Data from M/HQ—a wealth advisory company based in Dubai—found that Abu Dhabi Global Market’s (ADGM) is host to over 5,000 SPVs, encompassing property and equity; it’s a substantial jump from a mere 46 SPVs in 2016.
Vladimir Lisin, the fourth-wealthiest Russian according to the Bloomberg Billionaires Index, recently established Serenity II Holdings and Nebula II Holdings in ADGM in May 2023. His decision was influenced by Abu Dhabi’s stock exchange, connections to global investors such as Dalio, and the region’s robust economic and legal stability.
Other high net worth individuals like CZ Zhao, Nassef Sawiris, and Gautam Adani have also capitalised on ADGM’s advantages by establishing SPVs.
Key factors fuelling Abu Dhabi’s growth
Abu Dhabi’s growth in attracting SPVs is bolstered by confidentiality, robust investor protection under English common law, low taxation, and minimal shareholder restrictions. This attractiveness extends to dealmakers seeking investments and partnerships, as well as the approval of the emirate’s wealth funds.
The emirate also boasts compelling advantages, including insulation from foreign jurisdictions, access to the UAE’s double tax treaty network, opportunities for long-term residency, and citizenship eligibility. The UAE’s stance on countries facing sanctions, its stable legal environment, and its connections to global investors like Ray Dalio also contribute to its allure.
As per Bloomberg, the UAE has surged ahead as an increasingly favoured destination for financial holdings, outpacing other renowned hubs. The ascent of ADGM SPVs coincides with a period marked by intense regulatory changes and natural disasters impacting other havens within this domain. Hurricanes and EU sanctions have prompted shifts away from places like the British Virgin Islands and Caymans.