Abu Dhabi, the capital of the United Arab Emirates, has continued to attract major global and regional players to its International Financial Centre (IFC), Abu Dhabi Global Market (ADGM). A strong performance during the first half of 2023 (H1 2023) by ADGM has demonstrated significant growth across various aspects, setting a positive tone for the rest of the year and continuing its contribution to positioning Abu Dhabi as a leading financial powerhouse and a ‘falcon economy’.
Strengthening Abu Dhabi's Position as the GCC’s Financial Powerhouse
Recent numbers showcase several investment firms and hedge funds setting up within ADGM; reaching a total of 102 asset managers operating in ADGM and managing 128 funds, contributing to Abu Dhabi’s leading position in the asset management sector. ADGM’s assets under management (AUM) highlighted a year-on-year record growth of 35% as of June 2023.
Another plug-in to this sector was the announcement of the enhancements to the regulatory framework of the Financial Services Regulatory Authority (FSRA) of ADGM, enabling ADGM-based collective investment funds to invest in credit by originating and participating in credit facilities. Alternative financing for private enterprises, especially within the Small and Medium-sized Enterprise (SME) sector, was one of the major focusses of introducing the Private Credit Fund framework.
The attractiveness of ADGM as a holistic financial hub, which stands as the sole jurisdiction in the region to adopt the direct application of English common law, has resulted in prominent global firms establishing themselves in ADGM in 2023, such as Brevan Howard, Ardian, Goldman Sachs, Tikehau Capital, Blackstone, SBI Capital, Asian Infrastructure Investment Bank (AIIB), Apollo, Fifth Wall, Fidera and Vibrant Capital. The IFC also witnessed a major addition in the first half of 2023, welcoming legendary investor Ray Dalio, who has selected Abu Dhabi as its next strategic hub to expand his family office’s global footprint.
ADGM is also considered a preferred destination for heavy-weight local and regional firms such as ADQ, Chimera, G42, Gulf Capital, OneIM and Investcorp.
Other renowned international and regional players in the financial space are soon to be fully operational within ADGM, as a total of 46 firms have already been granted In-Principle Approval (IPA) during the first half of 2023. This is a striking increase of 119% compared to the same period last year.
Commenting on their expansion to ADGM, Alan Howard, Founder of Brevan Howard, said: “Abu Dhabi and ADGM offer a transparent and business-friendly environment to the banking, fintech, and investment management industries. It is an important global hub with tremendous potential. We are delighted to partner with the government as it builds and develops for the future.” Brevan Howard manages over USD 30 billion on behalf of institutional clients globally.
Rajeev Misra, CEO of OneIM, commented, “Abu Dhabi has become an international hub for investors, employers and employees alike. This Financial Services Permission (FSP) will enable us to pursue many of the exciting opportunities we see in this region and to propel the firm into the next stage of its journey.”
Pioneering Sustainable Finance and Welcoming Global Sustainability Titans
H1 2023 witnessed ADGM’s FSRA implementing its sustainable finance regulatory framework, comprising the region’s most comprehensive ESG (Environmental, Social, and Governance) disclosure requirements and a regulatory framework for funds, discretionary managed portfolios, bonds and sukuks designed to accelerate the transition of the UAE to net zero greenhouse gas emissions. The framework complements ADGM’s existing regulation of carbon offsets, facilitating the establishment of the world’s first regulated carbon offsets exchange and clearing house in ADGM, AirCarbon Exchange (ACX).
In March, ADGM FSRA together with other members of the UAE Sustainable Finance Working Group (SFWG), issued a draft “Principles for the Effective Management of Climate-Related Financial Risks” (“the draft Principles”) for consultation and will be published in the second half of 2023.
Earlier this year, the USD 100 billion multilateral development bank, Asian Infrastructure Investment Bank (AIIB) signed an agreement to establish its first Interim Operational Hub at ADGM, which will become its first overseas office. The AIIB’s mission is to finance infrastructure with sustainability at its core.
These measures reflect ADGM’s position as a leading sustainable finance hub in the year that the UAE hosts COP28.
ADGM’s Efficiency Continues to Elevate Despite Being One of The World's Largest Financial District
A significant milestone in ADGM’s growth journey this year was marked by the announcement of the tenfold expansion of its geographic area, bringing Al Reem Island under its jurisdiction, in addition to the existing Al Maryah Island. It has positioned ADGM as one of the largest financial districts in the world, totalling 14.38 million sqm.
The expansion was the next natural step for ADGM following the growth trajectory it has experienced in recent times with global, regional and local companies increasingly choosing Abu Dhabi as the destination to expand and grow their businesses. This is also reflected in H1 2023 numbers with the operational entities soaring to a 36% year-on-year increase as of June 2023 to reach a total of 1,590 entities. Furthermore, during the same period, ADGM Square’s workforce displayed a rise of 28% bringing a total of 12,080 talented individuals.
As ADGM enters its transitional phase with the expansion, it is focussing on resource management and delivering services for businesses seamlessly. From June 2022 to June 2023, the efficiency and speed of issuing commercial licences witnessed a notable 50% improvement. There has also been a remarkable 69% increase in efficiency and speed specifically for issuing commercial licences for SPVs.
ADGM’s value proposition is further materialising through the IFC’s client relationship and management (CRM) services that ensure a seamless journey from onboarding to completion. Moreover, the unique support provisioned by ADGM’s sovereign and strategic partnership team targets to drive customer success satisfaction, by facilitating access to capital providers, Government-Related Enterprises (GREs) and larger Abu Dhabi incorporation.
Additional significant achievements for H1 2023
The Registration Authority of ADGM published a consultation paper on the legislative framework for Distributed Ledger Technology (DLT) Foundations.
ADGM launched its inaugural Money Laundering and Terrorist Financing (ML/TF) Risk Assessment of ADGM Legal Persons and Arrangements Report (LPA Report) in May 2023.
Abu Dhabi Sustainable Finance Forum (ADSFF) concluded its fifth edition with a focus on ‘Charting the path to COP28,’ as the nation prepares to host the global event later this year.
The second edition of RESOLVE was launched as Abu Dhabi’s dispute resolution forum by ADGM Courts and ADGM Arbitration Centre that witnessed a physical attendance of more than 2,400, focused on Sustainability, Web3 and AI, Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) and sanctions, as well as the evolving infrastructure of the UAE.
ADGM announced the return of Abu Dhabi Finance Week which will be held from 27th November to 30th November 2023.
Commenting on these positive developments, H.E. Ahmed Jasim Al Zaabi, Member of Abu Dhabi’s Executive Council & Chairman of the Abu Dhabi Department of Economic Development (ADDED) and ADGM said, “What we are witnessing in Abu Dhabi today, with some of the major global players choosing the capital city to base their business operations is nothing short of a major transition that is supporting the growth and diversification of the ‘Falcon Economy’. We are excited to see the growth numbers of ADGM at the end of the first half of 2023 which reinforces our position as the fastest-growing international financial centre in the region. Our efforts underline Abu Dhabi’s economic vision and ADGM’s overall strategy to make the financial sector a strong contributor to Abu Dhabi’s GDP and knowledge-based economy. Our outlook remains strong for 2023, as we continue working with key government stakeholders on the seamless expansion of ADGM’s jurisdiction and catering to the growing demand of businesses to be based in Abu Dhabi.”
The overall positive outlook for 2023 that ADGM has successfully shown since the start of the year reflects its Growth Strategy 2023-2027 and its alignment with Abu Dhabi’s goals to drive the engine of sustainable economic diversification with the growing financial sector strategically fuelling it.