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Abu Dhabi Financial Fortitude
Abu Dhabi is ascending the ranks of the world’s leading financial centers, rivalling top global cities as a magnet for investors and businesses.
Attracted by Abu Dhabi’s vast pools of capital, advanced banking infrastructure and promising investment opportunities, global companies are flocking to the UAE’s capital.
This is an environment where innovative start-ups thrive, and world-leading companies make rapid progress on their pathway to success. Home to some of the world’s largest sovereign wealth funds including the Abu Dhabi Investment Authority (ADIA), Abu Dhabi Developmental Holding Company (ADQ), and Mubadala Investment Company, Abu Dhabi offers plentiful sources of investment capital. These funds offer combined wealth exceeding $1.5 trillion. ADIA is ranked as the fourth biggest sovereign wealth fund globally and has assets worth over $990 billion.
Abu Dhabi’s extensive capital resources make it an attractive location for both local and international private equity investors and venture capital funds. French private equity firm Ardian opened offices in Abu Dhabi last year and Blackstone and Apollo of the US operate in the city. The emirate is home to local private equity businesses such as Catalyst Partners, a joint venture between Mubadala Investment Company and US fund Alpha Wave Global. Other local funds include G42’s expansion fund and venture capital funds such as 500 Startups.
Perfectly located at the intersection of three continents, Abu Dhabi is within four hours flight time of a third of the world’s population and within eight hours of 80% globally. The local Zayed International Airport connects to six continents and 75 destinations. This makes Abu Dhabi a hub for private equity investors from Europe, the US and Asia.
Global attraction
With the emirate’s strategy of diversifying its economy, interest is growing in a range of sectors such as finance, technology, infrastructure and health, which would benefit from private equity investments.
Hedge funds are flocking to Abu Dhabi’s shores. Ray Dalio, billionaire founder of Bridgewater Associates, is opening a branch of his family office in Abu Dhabi, Alan Howard, British co-founder of Brevan Howard Asset Management, has also opened an office, as has TCI Fund Management. Major banks such as JP Morgan and BNP Paribas expanded their offices in Abu Dhabi last year and Goldman Sachs announced it was setting up shop in the city.
Powering financial interest in the emirate is Abu Dhabi Global Market (ADGM), the fastest growing international financial center in the region. Established in 2013, it offers a sophisticated financial regulatory authority, a registration authority and a courts system based on the direct application of English Common Law. Located on Al Maryah Island, ADGM boasts banking, wealth and asset management and is an important center for capital markets, digital assets, and fintech. The number of firms registered on ADGM leapt nearly a third in 2023 to 1,825, and its workforce surged by over a fifth to 13,394.
Already the fastest growing financial center in the region for two years running, ADGM is in talks to attract some 125 global firms this year, including hedge funds and asset managers. Some 102 asset management firms managing 141 funds operate in the financial center.
The influx of top companies and famous names to Abu Dhabi is bolstering its reputation. It is an attractive place to do business, with streamlined government processes that make getting licenses and permits easy, making for smooth operations. Abu Dhabi provides a competitive tax environment with 15% corporate tax for large multinationals, VAT at just 5% and no personal income tax.
One of the safest cities in the world – with the highest safety ranking in the Numbeo Index for eight consecutive years – Abu Dhabi also has excellent infrastructure and services. The emirate is named the best city to live in the Middle East in the EIU Liveability Index 2021-2023. Abu Dhabi boasts a highly trained and enthusiastic workforce keen on opportunities in finance, technology, and other sectors of the global economy.
A measure of the emirate’s economic prowess can be seen in the 2023 Gross Domestic Product figures, which show Abu Dhabi’s GDP rising 3.1% compared to 2022, with non-oil GDP soaring by 9.1%. Significant strides are being made to bolster the non-oil economy, which now accounts for 53.4% of the emirate’s total GDP. Finance and insurance are core to this diversification, growing by 25.5% year on year growth in 2023 to AED79 billion (some $21.5bn).
Beyond oil
In February 2022, Abu Dhabi launched the ‘Investor Journey’ – a fully digitalized experience designed to address the needs of prospective entrepreneurs and investors by reducing costs, offering seamless integration and an advanced service ecosystem.
Driving the emirate’s broad-based financial and economic success is the powerful strategic vision of the Abu Dhabi Department of Economic Development. ADDED has boosted the contribution of non-oil industries to Abu Dhabi’s success by nurturing competitiveness and driving diversification. Abu Dhabi’s abundant capital resources, geographical location, sophisticated regulatory regime, low-tax environment, and great liveability, have turned it into a financial powerhouse. It is attracting huge interest from around the globe and is at the forefront of the future of finance.
“As Abu Dhabi rises among the ranks of premier financial centers, we continue to foster a robust ecosystem that facilitates the convergence of finance and technology. This will be instrumental in driving further economic progress and solidifying the emirate's financial strength. By acting as a nexus for capital, talent, and entrepreneurial spirit, Abu Dhabi is well-positioned to carve out a niche in the global financial landscape, attracting high-quality investments and propeling its economic leadership." Al Zaabi says.
Future fortitude
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Al Maryah island in Abu Dhabi
One institution raising Abu Dhabi’s financial profile is Abu Dhabi Securities Exchange, ADX, the region’s second largest public stock market, which has a market capitalization of $817bn. Some 40% of ADX investors are from overseas. Last year, the market raised half of all IPO revenues in the Middle East region with six IPOs worth a total of $5.57bn. ADX offers exceptional liquidity and provides dual-listing opportunities – last year it signed a partnership with the New York Stock Exchange.
“Abu Dhabi's economy, with its strategic push towards diversification, has become a paragon of resilience and innovative growth. The financial sector, catalyzed by the Abu Dhabi Global Market (ADGM), has become a magnet for leading financial institutions and discerning investors. This is due in part to the emirate’s commitment to fostering innovation, not just in finance, but also in its approach to environmental sustainability" says H.E. Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Department of Economic Development (ADDED) and ADGM.
+53%
The non-oil economy now accounts for more than 53% of the emirate's total GDP
$817bn
ADX, the region’s second largest public stock market, which has a market capitalization of some
$990bn
ADIA is ranked as the fourth biggest sovereign wealth fund globally and has assets worth over
The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters.
PRODUCED BY REUTERS PLUS FOR
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Disclaimer: The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters. To work with Reuters Plus, contact us here.
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