Gulf Jurisdictions Flex VC Muscles, Attract Wealth Inflows

Tom Burroughes Group Editor 12 October 2021

Gulf Jurisdictions Flex VC Muscles, Attract Wealth Inflows

We talk to Apex Fund Services in the Gulf region about what trends it sees playing out in jurisdictions such as the UAE and Bahrain, among others.

Geopolitics and the pandemic haven’t been kind to some jurisdictions. But for those that appear to have got their act together on vaccines and have proved that they are stable places in which to do business, recent years have seen an improvement. 

High net worth individuals are taking notice of Dubai and the Gulf which is clearly good news for what at times has been a volatile property market in the Gulf region. The 2020 signing of the Abraham Accord between the United Arab Emirates and Israel was a boost for both jurisdictions (see an interview here with Citi Private Bank). Being open to capital inflows is a clear theme: the UAE recently implemented a legislative change that permits 100 per cent foreign ownership of certain onshore companies. And plenty of banks and wealth organisations are hungry to tap into this market. Banks such as Singapore’s DBS, Swiss-listed EFG International, Union Bancaire Privée and Standard Chartered have been bolstering or starting operations in the jurisdiction. And, as this news service noted via its awards programme, firms making an impact in the region also include Asiaciti Trust; BNP Paribas Wealth Management, Liechtensteinische Landesbank and M/HQ, among others.

An important component of a successful wealth management centre is a regime that enables funds and other structures for wealth to be set up, managed, reported on and distributed. One firm operating in the space is Apex Fund Services, which offers financial solutions, fund solutions and corporate solutions. the firm was launched in the Abu Dhabi Global Market about three years ago, rolling out various services from ADGM, running in parallel with what it does in Dubai.

This news service recently spoke to Glyn Gibbs, who joined the firm in October 2015, and has been based in Dubai since 2008. He has 40 years of industry experience in corporate and institutional roles within the asset management industry. We asked Gibbs what sort of trends he is seeing play out.

“In the last 18 months we have seen a rise in venture capital. Primarily, we have a lot of digital set-ups that can offer attractive returns. Both the DIFC in Dubai and ADGM [Abu Dhabi Global Market] are promoting themselves as the ideal domicile for these types of funds. 

Gibbs noted, for example, that the ADGM cuts the amount of capital which promoters of VC funds must hold compared with those launching other types of funds with further support coming from both Abu Dhabi Catalyst Partners, which is investing in ADGM based managers and funds that pass its due diligence review, and ADIO which may contribute to a manager’s capital expenditure if its criteria are met. 

Another trend seen in the region, Gibbs said, is domiciles updating/establishing regulation surrounding vehicles that can be used by families as part of their succession planning. 

He said that Bahrain, for example, has updated its trust laws while both the ADGM and DIFC have introduced foundations which are aimed at families.

“With limited heavy industry the financial sector remains very important to the success of regional economies in attracting new businesses, thus the competition between these financial jurisdictions drives prudent regulatory innovation which is good for enterprises and investors,” he continued.

What lies ahead
“We tend to forget how fast Big Tech has arisen and the pace at which new technologies are driving change. We may not know who is going to be the next Google or Amazon or Apple but we can be sure that employment growth is not going to be in old tech but in new technologies. Hence the focus on venture capital makes sense, particularly when coupled with younger generations taking a more prominent role in managing family assets and being that much more attuned to and open to the deployment of capital in just such regional investment opportunities,” he said.

Gibbs agreed that the UAE/Israel pact has generated two-way tech and investment flows and more will come. 

“We are seeing new companies being set up in the UAE by Israeli entities with the UAE in turn wanting to see substance in the form of high value jobs created in the country and not just to be regarded as just a provider of capital,” he said. 

The stakes for setting wealth strategy in the Middle East region are high. Some numbers: the size of the high net worth individual population rose by 6.8 per cent in 2020, while HNW individual wealth rose by 10.7 per cent, reaching $3.2 trillion.

We asked Gibbs what sort of help family offices are looking for.

“Our experience is that family offices approach us for two main reasons: Our technology - particularly when it comes to operational support and reporting their overall investment portfolio which is often spread over multiple asset managers: and our global reach which, coupled with our comprehensive product suite, enables Apex to deliver a turnkey, one-stop solution for their needs whether that be for a Jersey private fund, a Luxembourg holding vehicle or a Cayman SPV,” he said.

Finally, this news service asked Gibbs about the impact of COVID on his business. 

“There is little doubt that the pandemic has prompted some expatriates to move home sooner than they planned. However, the numbers are much, much lower than may have been expected as the general character traits of a typical expatriate make them, in my opinion, more resilient to such interruptions, particularly given the excellent communication options that are available,” he said.

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