The emirate has seen an influx of major investment firms as it sharpens its financial services offer.

Often overshadowed by Dubai, the UAE’s capital and oil-rich emirate Abu Dhabi has rapidly emerged as a hotbed for international asset managers, family offices and hedge funds. Over the past few years, Abu Dhabi Global Market (ADGM), the emirate’s financial free zone, has solidified its reputation as a burgeoning global finance hub by attracting some of the most prominent names in the industry.

International asset managers like US-based Nuveen, which oversees $1.2tn in assets, and PGIM, the $1.33tn US asset manager, have established a presence within ADGM. Similarly, global hedge funds like Jersey-based Brevan Howard and family offices like US Elysium Management established a presence at ADGM. 

ADGM has witnessed a strong surge in assets under management (AUM), with firms and funds setting up. In the first six months of 2024, AUM grew by 226% compared to the same period last year, ADGM figures show. By the end of June 2024, 112 fund and asset managers were operating in ADGM, managing 141 funds. Moreover, the number of licences issued at the end of June 2024 increased by more than 20.5% compared to a year earlier.

“ADGM has established a trusted, and stable regulatory system and its ranking in business environment factors used in the Global Financial Centres Index (GFCI) is particularly favourable,” Mike Wardle, CEO of the Z/Yen Group, notes. “Its reputation among those across the world, working in investment management, is particularly strong, and it is likely that these factors are helping to drive inward investment.”

A cornerstone of ADGM’s appeal is its legal and regulatory framework, modelled on English common law. Through the Financial Services Regulatory Authority, ADGM seeks to provide a transparent, predictable and business-friendly environment for global asset managers and hedge funds.

Ashish Marwah, CIO of Neovision Wealth Management, an ADGM-based investment manager, underscores the importance of this legal foundation.

“What makes this implementation of English law] important is that every fund manager and counterparty can rely on precedent to get a clear assessment of their business risk and focus their efforts on growth rather than adding new risk management costs,” he says.

In addition to legal clarity, ADGM offers cost efficiencies compared to other financial hubs like the Dubai International Financial Centre (DIFC). 

Zana Jablan Musa, operations director at the Sovereign Group, a Dubai-based business consultancy, highlights that ADGM offers a cost-effective set-up, especially for start-ups and smaller firms, with lower registration fees and flexible office space options. “The DIFC, being more established, may come with higher associated costs, but these costs reflect its established infrastructure and market reputation,” she adds.

Abu Dhabi’s strategic location connecting Europe, Asia and Africa makes it an ideal gateway to the Gulf Cooperation Council region and broader emerging markets. This, combined with world-class infrastructure and high standard of living, makes the emirate appealing to global financial institutions and practitioners.

“There is a good quality of life; low tax regime; its safety, security and family orientated lifestyle,” says Dounia Mansour, counsel at law firm King & Spalding in Dubai. “In addition, it is generally cheaper than Dubai and other more expensive centres.”

Doug Greenig, CEO and CIO of Florin Court Capital, a hedge fund managing $2bn across London and Abu Dhabi, established its Abu Dhabi office in 2021, becoming one of the first international hedge funds to open in town.

“The basic criteria for the second office included the ability to trade Asian markets at reasonable hours, a decent overlap with London office hours, a high quality of life, and a central geographic location. The UAE is a perfect fit,” he says.

He concedes that while DIFC is an excellent financial centre, he chose to base the firm in the UAE’s capital. “So why Abu Dhabi? I think the quality of life is even better than in Dubai, especially for families,” he says. “I also had some pre-existing relationships in Abu Dhabi. So, ADGM made sense for me.”

Abu Dhabi accounts for 68% of the UAE’s economic output and manages around $1.7tn in sovereign wealth fund assets, according to Global SWF. The emirate is home to influential investment vehicles, like the Abu Dhabi Investment Authority (ADIA), Mubadala and ADQ, which play a pivotal role in the global investment landscape.

In the first three quarters of 2024 alone, ADIA, Mubadala and ADQ collectively invested $36bn globally — two-thirds of all Gulf sovereign fund investments during that period, GlobalSWF figures show. For international asset managers and hedge funds, proximity to these massive pools of capital is a key attraction.

“Abu Dhabi’s sovereign wealth funds, their strong reputations, and their track record of investment activities are all major incentives for funds to set up in Abu Dhabi or expand their presence,” says Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington.

Abu Dhabi also hosts federal entities including the UAE central bank and influential family offices, providing international fund managers with opportunities to forge partnerships and explore investment opportunities.

To attract sustainable funds, ADGM has taken significant steps to position itself as a sustainable finance hub. It hopes to draw capital and investment to support climate-related projects in the oil-rich Gulf state which is seeking to decarbonise its economy.

In addition to sustainability, ADGM has also emerged as a regional hub for fintech and digital assets. An ADGM spokesperson says that their approach to digital finance includes robust frameworks for distributed ledger technology, digital assets and blockchain.

“Our regulatory structure is designed to provide clarity and security, making ADGM an ideal environment for fintech companies and blockchain innovators to thrive,” says the spokesperson. “This aligns with our vision to position ADGM as a leading digital financial hub, further attracting global digital finance leaders to Abu Dhabi.”

ADGM RegLab is a regulatory sandbox that allows fintechs and start-ups as well as established firms to test and develop new solutions in a controlled environment, before rolling out to market. Tied to this, ADGM Digital Lab enables start-ups and firms to access services like data, system images and reference architectures.

ADGM also supports digital assets and alternative investments, drawing in hedge funds interested in digital currencies and tokenised securities. 

Alongside this, it is a partner and home to HUB71, a global tech ecosystem, which provides support to start-ups as well as connecting them to investors, government and corporate partners.

In November, the UAE launched a National Investment Strategy which aims to increase foreign direct investment by 2031. Aligned with the ‘We the UAE 2031’ vision, the UAE aims to become a global investment hub by developing emerging sectors and attracting talent. 

ADGM’s activities will be a key part of supporting these efforts.