Dubai hits target in wealth management ambitions

The bright lights of Dubai are attracting some of the biggest names in global finance. (Shutterstock)
Updated 21 September 2018
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Dubai hits target in wealth management ambitions

  • Dubai is fast becoming a global center for wealth management, according to new figures from the emirate’s financial hub.
  • Fidelity International, the Bermuda-based investment management group, announced it too was to set up in the DIFC

The Dubai International Financial Center on Sunday announced it had passed a landmark of 200 firms in the fast-growing wealth and asset management sector that had chosen to be based in the center, a rise of 6 percent from the halfway point last year. Some 13 of the top 25 firms in the wealth management sector are included in that total.

The number of financial funds under management by DIFC entities has leapt by 240 percent in the same period, from 25 to the latest figure of 60, making it the largest funds domicile in the region, the DIFC said. 

Arif Amiri, chief executive of DIFC, said: “The wealth and asset management sector is a cornerstone of a thriving financial services industry, and as the DIFC has developed into a top global financial center, it has become one of our hallmarks. Major financial institutions see Dubai and the DIFC as a preferred platform to access investment opportunities and sources of investment across regional and global markets.

“To date, the center has seen consistent and significant growth in this field, reflecting the industry’s ongoing confidence in Dubai and the DIFC. We expect to see this growth continue as we introduce new regulations to our attractive legislative and business environment in line with our ambitious 2024 Strategy. Our flexible structures, which also benefit private wealth management and family trusts, continue to give us the edge,” he added.

The DIFC is committed to a ten-year strategy of trebling in size by 2024 in terms of the number of member firms and employees as well as the value of assets under management.

In the first half of 2018, the DIFC attracted three of the biggest names in global finance, Chinese firm Everbright Group and American giants State Street Global Advisers and Berkshire Hathaway Specialty Insurance.

 

 Last month, Fidelity International, the Bermuda-based investment management group, announced it too was to set up in the DIFC.

“These companies benefit from three types of fund structures, as well as tried-and-tested special-purpose companies and insurance special-purpose vehicles, used in structured financing transactions or related to entities of substance. The DIFC’s international-standard regulatory framework and flexible business environment are already paying dividends to global and regional companies within the Center’s community,” the center said.

In total, the DIFC reported a 17 percent rise in new financial institutions registering in the first half of the year, bringing the total to 2,003 with a combined workforce of nearly 23,000.

That period coincided with the decline of Abraaj Capital, the private equity fund manager that has been at the heart of the DIFC since it opened in 2004, but which was ultimately owned by a Cayman Islands holding company.

Financial and legal experts believe there will be no significant damage to Dubai from the Abraaj affair. Habib Al Mulla, one of the UAE’s leading corporate lawyers, told Arab News recently: “I don’t believe Dubai’s reputation has been damaged. The DIFC entity is not involved. There are various Abraaj entities which are subject of different jurisdictions.”

Nigel Sillitoe, chief executive of market research group Insight Discovery, which specializes in wealth and asset management sectors, said: “In the past quarter our company has received more requests than ever to support asset management companies within the DIFC.

“The recent woes at Abraaj did make us think that business might slow down but so far we haven’t seen any impact.” 

The center enacted two new laws in March: The trust law, which provides an appropriate environment for the operation of trusts in the DIFC, and the foundations law, a new regime to provide greater certainty and flexibility for private wealth management and charitable institutions.

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The DIFC reported a 17 percent rise in new financial institutions registering in the first half of the year, bringing the total to 2,003 with a combined workforce of nearly 23,000.


Ghosn’s arrest casts doubt on future of Renault-Nissan alliance

Updated 20 November 2018
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Ghosn’s arrest casts doubt on future of Renault-Nissan alliance

  • Carlos Ghosn been ‘the glue that holds Renault and Nissan together,’ Bernstein analyst Max Warburton wrote in a note to investors
  • With Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer

DETROIT: For years, France’s Renault and Japan’s Nissan struggled to make money in the global auto business.
Then came Carlos Ghosn, a Renault executive who helped to orchestrate an unprecedented transcontinental alliance, combining parts of both companies to share engineering and technology costs.
Now Ghosn’s arrest in Japan for alleged financial improprieties at Nissan could put the nearly 20-year-old alliance in jeopardy.
Ghosn, 64, born in Brazil, schooled in France and of Lebanese heritage, is set to be ousted later this week from his spot as Nissan chairman. He also could also lose his roles as CEO and chairman of Renault, threatening the alliance formed in 1999 that’s now selling more than 10 million automobiles a year.
He’s been “the glue that holds Renault and Nissan together,” Bernstein analyst Max Warburton wrote in a note to investors. “It is hard not to conclude that there may be a gulf opening up between Renault and Nissan.”
Nissan has said it will dismiss the Ghosn after he was arrested in Japan Monday for allegedly abusing company funds and misreporting his income. That opens up a leadership void at the entire alliance, for which Ghosn officially still serves as CEO and chairman.
Ghosn added Mitsubishi to the alliance two years ago after the tiny automaker was caught in a gas-mileage cheating scandal. He had even floated the idea of a full merger between the three companies.
“Today’s events throw any prospect of that up in the air,” Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note to investors.
Nissan CEO Hiroto Saikawa has publicly resisted the idea of an outright merger. So, with Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer.
The companies now share technology, and they save money by jointly purchasing components.
While there could be some scrutiny of the relationships between the companies, they’re so intertwined now that cutting them apart would be difficult, said Kelley Blue Book analyst Michelle Krebs. “I would not predict its demise,” Krebs said of the alliance.
She said she sees further consolidation in an industry that faces unprecedented research costs for autonomous and electric vehicles, while at the same time continuing to develop cars and trucks powered by internal combustion engines.
“The last thing one of the world’s biggest automakers needs is the disruption caused by an investigation into the behavior of a man who has towered over the global auto sector,” said Michael Hewson, chief market analyst at CMC Markets in London.
Nissan’s board is to meet Thursday to consider Ghosn’s fate. Renault, where Ghosn is also CEO, said its board will hold an emergency meeting soon, and experts say it is unlikely that he will be able to stay at the company or the broader alliance.
The brash Ghosn was once viewed as a savior in the auto business with the ability to turn around the two struggling companies. In 2006 he even proposed an alliance with global giant General Motors.
Bernstein’s Warburton wrote that Ghosn’s once-mighty reputation has been declining for years, while Krebs said Nissan never could meet Ghosn’s goal of 10 percent US market share even though it has relied on “bad behavior” such as heavy discounts and sales to rental car companies.
Saikawa reiterated Nissan’s commitment to the venture, while a Renault statement expressed “dedication to the defense of Renault’s interest in the alliance.”