Dubai eases fund regulations

Wanting to reposition itself as a competitive fund domicile, Dubai is creating a more friendly regulatory environment for private funds managers.  

While European rivals like Luxembourg and Ireland continue to attract the lion’s share of new fund business in the MENA region, Dubai hopes to stay competitive with a new fund vehicle aimed at private fund managers.

The Qualified Investor Fund (QIF) can be offered to professional investors who commit at least $500,000. The new rule amounts to half of the previously proposed $1 million investment threshold. Each QIF can have no more than 50 investors.

The fund can be domiciled in the Dubai International Financial Centre (DIFC), a financial free zone created in 2004 to attract banking and financial services business.

The DIFC however has attracted little fund business, with industry professionals saying the local regulatory regime there was too restrictive and didn’t feature necessary support services like fund administrators, custodians and lawyers.

In an attempt to change that, the QIF has greater flexibility in appointing custodians and less reporting requirements. The fund can also invest in fund of funds, which was previously an investment restriction on GPs.

While Dubai has not historically been a major magnet for fund business, some commentators argue its ability to act as a link between Europe and Asia could see its popularity grow in the industry.