Abu Dhabi Emerges as Premier Wealth Hub: Billionaires Flock to Establish SPVs in Growing Financial Centre
Billionaires from diverse backgrounds are increasingly choosing Abu Dhabi as their preferred destination, highlighting its newfound status as a premier wealth hub. Notable figures like cryptocurrency magnate Zhao Changpeng, the influential Adani family, hedge fund billionaire Ray Dalio, and Russian steel titan Vladimir Lisin have all established Special Purpose Vehicles (SPVs) within Abu Dhabi's international financial centre, according to Bloomberg News.
The Abu Dhabi Global Market (ADGM) has witnessed a remarkable surge in SPVs, exceeding 5,000 from a mere 46 in 2016, according to M/HQ, a leading wealth advisory firm. This surge positions Abu Dhabi ahead of traditional low-tax jurisdictions like the British Virgin Islands and the Cayman Islands, which face increased scrutiny and declining corporate registrations.
The appeal of Abu Dhabi's transformation is underlined by the strategic use of the UAE's golden visa and passport programs. Bhaskar Dasgupta, a corporate adviser with experience in the Abu Dhabi Free Zone, notes the sharp increase in high-net-worth individuals moving from traditional jurisdictions to Abu Dhabi.
Key Reasons Abu Dhabi Attracts Billionaires
- Golden Visa Programs: Abu Dhabi's success in attracting SPVs is attributed to the strategic utilization of the UAE's golden visa and passport programs. These reforms encourage wealthy individuals to establish a more permanent presence in the Gulf state.
- Permanent Presence: Armand Arton, founder of citizenship firm Arton Capital, highlights the trend of billionaires moving to Abu Dhabi, feeling welcomed and safe before relocating their businesses and assets, with ADGM being a preferred location.
- SPVs as Wealth Management Holding Companies: SPVs in Abu Dhabi, initially popularized by Michael Milken, serve as distinct legal entities allowing high-net-worth individuals to isolate financial risks effectively. Operating as wealth management holding companies, Abu Dhabi's SPVs can encompass a diverse range of assets.
- Diversification from Oil Dependence: The influx of wealth plays a pivotal role in diversifying the UAE's $509 billion economy away from oil dependence. Abu Dhabi's attractiveness lies in robust mechanisms for ring-fencing assets and leveraging the UAE's double tax treaty network to minimize tax liabilities.
- Long-Term Residency and Passports: Abu Dhabi and Dubai offer long-term residency and, in some cases, UAE passports to significant investors, further enticing the global elite.
- Sovereign Wealth Funds and Private Investment Firms: The presence of sovereign wealth funds exceeding $1 trillion and influential private investment firms adds appeal for billionaires considering relocation.
- Royal Family Support: Abu Dhabi's financial structures gain support from the royal family, with subsidiaries of the Royal Group establishing numerous ADGM SPVs.
Notable investors like Nassef Sawiris are also joining the trend, relocating family offices to Abu Dhabi. The plan is to re-domicile within the Abu Dhabi Global Market, strategically amassing substantial stakes in companies across Europe, the Middle East, and North America, pending regulatory approval.
Abu Dhabi's rise as a wealth hub signifies its growing prominence on the global stage, offering strategic advantages for billionaires seeking to establish and grow their financial presence.
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