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.


There is ‘no good Brexit’ for UK car parts boss

A Mini on the assembly line in Oxford, UK. Car-sector companies are shaking up manufacturing processes because of fears that Brexit will make trade harder. (AFP)
Updated 17 November 2018
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There is ‘no good Brexit’ for UK car parts boss

CANNOCK: “There is no good Brexit!” insists Greg McDonald, chief executive of Goodfish Group, a UK-based company making plastic components for the country’s key car sector.

The small company, nestled in the Midlands not far from Birmingham, the UK’s second largest city, sells one third of its products to mainland Europe, with weekly shipments to Poland and one every 10 days to the Czech Republic.

In addition, most of what the group sells in the UK ends up being shipped overseas.

To help Brexit-proof the business — and the whole auto industry is worried about potential disruption at ports — Goodfish is looking at possibly setting up production facilities in central or eastern Europe.

“It’s our way of combating potential loss of business and also (ensuring) future growth,” McDonald, 56, told AFP.

“If you’re a business owner and all your investment and all your wealth is tied up in your business, which is mostly the case (here), you don’t wait to be told by the politicians what the final outcome is.

“You make plans to address the situation as you see it,” said McDonald, who has lived in France, Germany, Ireland and Switzerland.

Goodfish is not alone among car-sector companies shaking up manufacturing processes because of fears Brexit will ultimately make trade harder.

The industry body, Society of Motor Manufacturers and Traders (SMMT), has blamed Brexit uncertainty for plunging UK investment, warning about the harmful impact of new, post-Brexit customs controls.

The Midlands is home to 40 percent of the UK’s 186,000 auto sector workers, including Indian-owned Jaguar Land Rover (JLR), which has already taken the plunge into Europe.

JLR recently opened a €1.4-billion ($1.6-billion) factory in Nitra, western Slovakia, its first in continental Europe ahead of Britain’s planned EU departure on March 29.

UK companies’ manufacturing processes are complicated by the need to import raw materials, which have become more expensive owing to a sliding pound — caused in turn by Brexit jitters.

“Of course we’re suffering from weak sterling because of the fears of Brexit,” McDonald said.

UK manufacturers who have survived previous difficult financial cycles “are the exporters,” McDonald pointed out.

A young company with 125 staff, Goodfish was founded in 2010 and has annual turnover of more than £10 million ($12.8 million).

How it builds on its success is likely to depend largely on the final terms of the UK’s post-Brexit trade agreements.

The draft document agreed with Brussels this week states that during a transition period ending on Dec. 31, 2020, EU law will apply to give businesses time to prepare for new ties.

This means the UK will continue to participate in the EU Customs Union and the Single Market.

It allows Britain continued market access to the remaining 27 EU countries but it must respect the rules on free movement of goods, capital, services and labor without having any say in EU decision-making.

“Of course a customs union gets around most of the problems but having to follow the rules of the EU without actually having any say on what these rules are — that’s definitely a worse position” than now, McDonald said.