Hedge funds flock to Dubai’s DIFC, doubling in the last 2 years
Hedge funds continue to pour into the bustling Dubai International Financial Centre, more than doubling in number from two years ago.
Close to 80% of the 102 funds now operating in the economic free zone manage at least $1 billion in assets, with global players like Oak Hill Advisors, Baron Capital, BlueCrest and Silver Point among recent arrivals, Bloomberg reports,
Beyond hedge funds, the DIFC contains nearly 500 wealth and asset management firms, the news agency said, up from about 350 at the start of last year.
The surge reflects the growing appeal of Dubai’s tax-free regime, its time zone aligned with Europe and access to deep pools of capital and talent. Many of the new offices, though, consist of secondary branches rather than headquarters as the city competes with established global hubs such as New York and London, the news agency notes.
Growth is also attributed to more than 1,250 family-related business entities based in the free zone and the UAE’s rising appeal among relocating millionaires.
Global Islamic finance assets expected to reach $9.7 trillion
Global Islamic finance assets are projected to soar by more than 60% over the next four years to $9.7 trillion, driven by gains in banking, bonds and insurance markets.
According to a study by the London Stock Exchange and the Islamic Corp. for the Development of the Private Sector, the sector has been growing by an average 10% annual rate, Arab News reports.
The report says Iran, Saudi Arabia and Malaysia together hold roughly $4.3 trillion in Islamic finance assets, or about 72% of the total.
It says the U.K. has emerged as a key hub for Islamic finance, particularly in the sale of sustainable sukuk bonds.
Kuwait banks explore deal to create $50 billion Islamic lender
Two of Kuwait’s biggest banks are exploring a merger that would create an Islamic lender with more than $50 billion in assets.
The proposed tie-up comes amid a wave of banking consolidation across the Middle East, partly driven by competition for financing large-scale projects as Gulf countries rapidly diversify away from oil.
Boubyan Bank, with assets worth $29 billion and Gulf Bank, with assets worth $24 billion, will conduct due diligence and valuation studies into the potential deal, the two lenders said in a statement.
The move comes as Kuwait Finance House weighs taking a large stake in Saudi Investment Bank, while National Bank of Bahrain considers a potential merger with Bank of Bahrain and Kuwait.
Consolidation of financial institutions in the GCC is being driven by the need to create lenders with greater scale as countries seek financing for mega-projects and other diversification activities aimed at boosting the non-oil economy.
These capital intensive activities, and the development and diversification of funding channels are expected to drive the GCC’s debt capital market to reach $1 trillion outstanding by next year, according to a new report from Fitch.
Saudi Arabia, which is contending with lower oil profits and mounting expenses associated with its Vision 2030 transformation plans, held a 43% share of the $940 billion outstanding government debt in the GCC at the end of Q1 2024, while the UAE held 30%.
Around 40% of outstanding government debt was sukuk – bonds compliant with Islamic sharia law – while the rest was in conventional bonds, Fitch said.
Environmental, social, and governance (ESG) sukuk, meanwhile, reached $18 billion outstanding in GCC countries, driven by increasing sustainability commitments, according to Fitch.
