Global hedge fund managers are turning their attention to the Middle East, with high-profile firms choosing to establish a presence in Dubai amid a strong talent pool and access to a growing asset base.

Last month, the Dubai International Financial Centre, a global financial hub for the Middle East, Africa and South Asia established in 2004, named five hedge funds that had established a regional presence in the hub in the second quarter: Hudson Bay Capital, Asia Research and Capital Management Ltd., King Street Capital Management, Balyasny Asset Management and Verition Fund Management LLC. Those firms join a long list of other money managers present on the DIFC’s public register, including Schroder Investment Management Ltd., MFS International (U.K.) Ltd., and FIL Distributors International Ltd. — Fidelity International.

The DIFC said the five hedge fund firms would relocate senior employees to the hub for portfolio management and investor relations activities.

That news followed a record number of hedge funds registering in the DIFC in 2022. The DIFC did not disclose the actual number that had registered, but said in an April report alongside data provider Refinitiv that while the Middle East was “a nascent market for hedge funds, estimated to account for less than 1% of global hedge fund AUM … DIFC is rapidly becoming a global financial center for alternative investments and hedge funds, with the region’s largest number of registered hedge funds and more than 60 in the pipeline.” Further, the report said hedge funds that are registered with the DIFC manage about $1 trillion in assets worldwide — with global hedge funds assets under management totaling about $4.84 trillion last year.

The DIFC wants to compete with Singapore, Hong Kong and other jurisdictions for hedge fund businesses outside of the traditional global hubs, such as London and New York, it said — and Dubai’s management of the COVID-19 period in particular brought it to hedge fund managers’ attention.

“Some financial hubs like London, New York and Hong Kong were subject to strict COVID restrictions and stringent lockdowns,” said Tom Kehoe, London-based managing director, global head of research and communications at the Alternative Investment Management Association, in emailed responses to questions. “By comparison Dubai took a more balanced approach (combining a strategy of rapid vaccine rollouts, sensible social distancing measures) which allowed them to by and large remain open for business.”

Dubai also has a “favorable tax regime (including no personal tax) compared to tax rises being endured elsewhere” and a visa scheme that includes self-sponsored renewable residence visas for “specialist talents” — including money managers — Mr. Kehoe said.

https://www.pionline.com/hedge-funds/hedge-funds-setting-dubai-access-talent-pool-investment-opportunities