Fund administration in the UAE is booming. In 2024, AUM in DIFC surged by 58% to $700 billion, while ADGM recorded a 226% increase in the first half of the year. As global investment activity rises, fund managers increasingly choose ADGM and DIFC for structuring and scaling their funds.
To explore these opportunities and challenges, we spoke with Charles Rix, our Middle East Fund Admin lead, who brings extensive experience in fund structuring, regulatory compliance, and governance in the UAE. Here are his key insights on why fund managers are choosing these financial hubs and how they can navigate the regulatory landscape.
What's driving growth in ADGM and DIFC?
Both ADGM and DIFC have become attractive due to their internationally recognised legal frameworks. Although both operate under common law, there are important differences. ADGM applies English Common Law directly, which is familiar to global investors and reduces legal uncertainty for fund structuring, investor agreements, and dispute resolution. By contrast, DIFC follows its own set of laws that, while based on common law, do not directly incorporate foreign legislation - instead, it employs a predefined legal hierarchy with English law as the fallback.
In addition to legal clarity, both centres are governed by robust regulatory bodies - ADGM by the Financial Services Regulatory Authority (FSRA) and DIFC by the Dubai Financial Services Authority (DFSA). Their clear frameworks ensure funds operate efficiently while meeting international standards such as FATF anti-money laundering requirements and OECD tax transparency rules.
Moreover, both jurisdictions offer competitive tax policies, with 0% corporate tax on most fund structures, making them cost-efficient alternatives to other international financial centres. Their global connectivity also provides direct access to institutional investors, family offices, and private equity firms across Europe, Asia, and the US.
What are the key differences between ADGM and DIFC?
While both jurisdictions offer strong environments for fund administration, they cater to slightly different investor profiles.
ADGM is renowned for its flexible fund structuring options, attracting a wide range of funds—from private equity and venture capital to alternative investments. Initiatives by the FSRA to streamline fund registration and promote innovation have led to a 226% surge in AUM in early 2024, with 112 asset and fund managers overseeing 141 funds. (ADGM official H1 2024 results)
DIFC, however, has a long-established reputation as a global financial hub, drawing a diverse mix of financial institutions. Its network of banks, law firms, and service providers makes it ideal for funds aiming to attract global investors. As of 2024, DIFC hosts over 370 wealth and asset management firms, including more than 50 pure-play hedge funds, with 44 in the 'billion-dollar club'. (DIFC's official H1 2024 results). (Dubai Media office).
Fund managers should assess their investment strategies, investor bases and compliance requirements to determine which jurisdiction aligns best with their objectives, and our team is well-placed to advise on this.
What are the biggest challenges fund managers face?
A primary challenge is understanding the specific regulatory and compliance obligations of each jurisdiction. Fund managers must meet licensing requirements, governance standards, and investor reporting obligations under the supervision of either FSRA or DFSA.
Operational demands – such as regulatory reporting, fund accounting, and maintaining ongoing compliance – are also significant. Many managers, particularly those new to the region, opt to outsource fund administration and compliance functions to streamline operations and mitigate risk.
Additionally, raising capital remains challenging in the current climate. Fund managers who gain the most traction – especially among institutional investors – are those that demonstrate a strong commitment to the region by maintaining a local presence. This "boots on the ground" approach not only reinforces their investment strategy but also signals to investors a genuine commitment to the area.
For instance, a private equity firm setting up in ADGM initially faced licensing delays due to unfamiliarity with FSRA requirements. With expert guidance, they refined their structure and fast-tracked approval, enabling them to onboard investors within their original timeline.
How does Praxis support fund managers?
At Praxis, we simplify the complexities of ADGM and DIFC regulations so that fund managers can focus on their investment strategies. We provide a comprehensive range of services – from fund structuring and setup, ensuring efficient incorporation and regulatory approvals, to regulatory reporting, compliance policy development, and overall adherence to FSRA and DFSA requirements.
Our team also offers fund accounting and financial oversight to ensure accurate reporting, alongside domiciliation and investor services to support robust governance. Many fund managers, particularly those new to the region, rely on our expertise to streamline operations and reduce regulatory risks.
What advice would you give fund managers?
Fund managers should begin by evaluating their investment goals, target investors, and regulatory needs to choose the jurisdiction – ADGM or DIFC – that best aligns with their strategy. Establishing a robust governance and compliance framework from the outset is crucial. Collaborating with an experienced fund administrator like Praxis ensures that managers remain compliant while focusing on fund growth. Finally, staying updated on regulatory developments and market trends in both ADGM and DIFC is essential to remain competitive and capitalise on emerging opportunities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
