“We have a pipeline of close to 100 firms in asset management, of which 85 per cent are hedge fund players,” says Sandy Shipton, executive director of wealth management at DIFC. “They are trying to white label their products.”
Among the applicants is UK hedge fund Thames River Capital. The DIFC is encouraging alternative investment funds, including sharia-compliant funds, to set up in the centre.
Argent Financial, domiciled at the centre, has developed a sharia-compliant mechanism, which mimics trading in its hedge fund.
“The goal is to have hedge funds come [to DIFC],” says Shipton. “Hedge fund managers are looking for an edge that makes them attractive. A new market is that [edge]. They are coming here to market their product and it gives them a window into India and Asia.”
The introduction of derivative instruments and exchange traded funds to the Dubai International Financial Exchange early next year is expected to boost hedge funds’ interest in the centre.
“The determinant of the long-term success of the DIFC is to have funds choosing to domicile there and to use the DIFC as a jurisdiction rather than the Cayman Islands or the British Virgin Islands,” says a Dubai-based investment banker.
There are 10 funds domiciled in the DIFC. Several firms are upgrading their licence from advising and arranging funds to operating them, says Shipton.