Abu Dhabi is swiftly emerging as the preferred destination for billionaires seeking to safeguard their assets, with prominent figures such as cryptocurrency magnate Zhao Changpeng, the Adani family of India, hedge fund titan Ray Dalio, and Russian steel tycoon Vladimir Lisin establishing special purpose vehicles (SPVs) in the skyscraper-studded emirate. This shift marks a departure from traditional offshore locations like the Cayman Islands or Switzerland, with Abu Dhabi gaining prominence in wealth protection strategies.
A review of hundreds of corporate filings in the United Arab Emirates by Bloomberg News revealed that over 5,000 SPVs now operate on the Abu Dhabi Global Market (ADGM), a notable surge from a mere 46 in 2016. While the exact origin of the billionaires' assets and the reasons for relocation remain undisclosed, the influx underscores a broader global trend in how the world's wealthiest individuals manage and safeguard their fortunes.
SPVs, originally popularized by Michael Milken in the late 1980s, have evolved into structures utilized by high-net-worth individuals to mitigate financial risks effectively. Abu Dhabi's SPVs, essentially wealth management holding companies, offer the capability to hold diverse assets, including real estate and shares.
Abu Dhabi's gains in attracting these high-profile individuals come at a time when some traditional low-tax jurisdictions, such as the British Virgin Islands and the Cayman Islands, face increased scrutiny globally, leading to a decline in new company registrations.
The ADGM, established in 2015 as an international economic free zone, has become particularly attractive due to its robust safeguards protecting assets from foreign jurisdictions and its leveraging of the UAE's extensive network of double tax treaties. The UAE's double tax treaty allows wealthy individuals to minimize taxes on companies within the SPV, depending on agreements with other countries where they operate.
Wealth advisers and international investors, speaking on the condition of anonymity, highlight several advantages that make Abu Dhabi an appealing choice for wealth protection. The emirate's ability to avoid imposing sanctions on countries like Russia, coupled with its network of double tax treaties, adds to its allure.
Abu Dhabi's success in attracting SPVs has been further boosted by its golden visa and passport programs, implemented over the past two years. These programs incentivize the wealthy to establish a more permanent residence in the Gulf state, fostering a trend of billionaires relocating both personally and in terms of their businesses and assets.
Armand Arton, founder of citizenship firm Arton Capital, notes the trend of billionaires moving into the UAE, stating, "Once they feel welcome and safe, they are then looking to relocate their businesses and assets, with ADGM being one of the preferred parts."
Abu Dhabi's status as a global city, offering long-term residency and, in some cases, UAE passports for significant investments, has contributed to its appeal. The sovereign wealth funds in Abu Dhabi control over $1 trillion in assets, alongside influential private equity firms, further solidifying the emirate's position as a wealth hub.
The UAE has also served as a haven for those facing regulatory challenges abroad. Notably, Zhao Changpeng, the former CEO of cryptocurrency firm Binance, purchased his first house in Dubai in 2021. In November, Binance and Zhao pleaded guilty to money laundering and US sanctions violations as part of a settlement with the United States.
In a world where asset protection and strategic relocation play vital roles for the ultra-wealthy, Abu Dhabi's ascent as a wealth hub underscores the evolving landscape of global wealth management strategies.
By fLEXI tEAM