Billionaires of various pedigrees have recently flocked to Abu Dhabi, underscoring its newfound status as a premier wealth hub.
Among them, cryptocurrency magnate Zhao Changpeng, valued at an impressive $30.8 billion, the influential Adani family from India, hedge fund billionaire Ray Dalio, and Russian steel titan Vladimir Lisin have all established special purpose vehicles (SPVs) within Abu Dhabi’s international financial centre.
This is according to a review of hundreds of corporate filings in the United Arab Emirates by Bloomberg News. The Abu Dhabi Global Market (ADGM) now boasts over 5,000 SPVs, a remarkable surge from a mere 46 in 2016, according to data compiled by M/HQ, a leading wealth advisory firm specializing in SPV setups.
The allure of this transformation is further emphasized by the fact that Abu Dhabi is outpacing traditional low-tax jurisdictions like the British Virgin Islands and the Cayman Islands, which are facing increased scrutiny and a decline in new corporate registrations.
According to Bhaskar Dasgupta, a corporate adviser with experience in the Abu Dhabi Free Zone,
- “ADGM is a great place to set up SPVs, and it’s increasing sharply. We’re seeing more high-net-worth individuals moving from the BVI (British Virgin Islands), Caymans, Mauritius, and Singapore to here.“
Why Abu Dhabi is a major attraction
Abu Dhabi’s success in attracting SPVs is attributed, in part, to the strategic utilization of the UAE’s golden visa and passport programs in recent years.
These reforms have created an environment that encourages the wealthy to establish a more permanent presence in the Gulf state.
Armand Arton, founder of citizenship firm Arton Capital, observes,
- “We see this trend of more billionaires moving to the country. Once they feel welcome and safe, they then look to relocate their businesses and assets, with ADGM being one of the preferred places.”
Special purpose vehicles (SPVs), initially popularized by junk-bond king Michael Milken in the late 1980s, serve as distinct legal entities allowing high-net-worth individuals to isolate their financial risks effectively.
Abu Dhabi contends that its SPVs, operating as wealth management holding companies, can encompass a diverse range of assets, including real estate and equities.
This influx of wealth to Abu Dhabi represents a pivotal role in the UAE’s $509 billion economy as the ruling Al Nahyan family endeavours to diversify away from oil dependence.
The emirate’s attractiveness lies in its robust mechanisms for ring-fencing assets from foreign jurisdictions and leveraging the UAE’s double tax treaty network to minimize tax liabilities for companies within the SPV.
Moreover, Abu Dhabi and its neighbouring city, Dubai, offer long-term residency and, in some cases, UAE passports to significant investors, further enticing the global elite.
The presence of sovereign wealth funds exceeding $1 trillion in assets and influential private investment firms adds a layer of appeal for billionaires considering relocation.
Abu Dhabi’s financial structures are increasingly gaining support from the royal family itself. Subsidiaries of the Royal Group, controlled by National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, have established numerous ADGM SPVs in the latter half of this year, as revealed by filings and sources familiar with the matter.
As highlighted in a prior Nairametrics report, Nassef Sawiris also joins the trend by relocating his family office to Abu Dhabi, where a slew of distinguished investors has already established their operations.
The plan is to re-domicile NNS Group within the Abu Dhabi Global Market, pending regulatory approval.
Subsequently, NNS Group seeks to strategically amass substantial stakes in a select number of companies, focusing primarily on regions such as Europe, the Middle East, and North America.
