ADGM: the fastest growing financial hub for the second consecutive year

The Abu Dhabi Global Market (ADGM), the international financial free zone located on Al Maryah Island in the heart of the UAE’s capital city, reported a 32% year-on-year rise in the number of operational entities in 2023. The total increased from 1,378 to 1,825 over the year, underscoring its position as the region’s fastest-growing financial hub.

The ADGM reported a year-on-year increase of 35% in assets under management (AUM) to the end of December 2023, with the total number of asset managers operating in the ADGM financial free zone reaching 102 and the total number of funds reaching 141. This surge was facilitated by enhancements to the ADGM Financial Services Regulatory Authority’s (FSRA) regulatory framework, particularly the Private Credit Fund framework.

The end of 2023 numbers also reflected 88 financial institutions and two exchanges that had received In-Principle Approvals (IPAs) from ADGM. ADGM said a further 125 firms were already in the pipeline to be registered in 2024.

New international entrants in 2023 included some of biggest names in global finance: US investment bank Goldman Sachs, US alternative asset manager Blackstone, Jersey-based hedge fund manager Brevan Howard, Paris-based private equity investor Ardian, Paris-headquartered alternative asset manager Tikehau Capital, Mumbai-based investment bank SBI Capital Markets, Beijing-based Asian Infrastructure Investment Bank (AIIB), US alternative asset manager Apollo Global Management, US real estate venture capital firm Fifth Wall, London-based investment manager Fidera and US alternative credit investment manager Vibrant Capital.

New local and regional entrants included Abu Dhabi sovereign wealth fund ADQ, venture capital asset manager Chimera Capital, artificial intelligence group G42, alternative investment manager Gulf Capital, alternative investment manager OneIM and Bahrain-based asset manager Investcorp.

ADGM was established in 2015 as a financial free zone in the Emirate of Abu Dhabi, with its own civil and commercial laws. Driven by innovation, it was the first jurisdiction in MENA to directly apply Common law, it established the world’s first fully digital courtroom, it introduced the world’s first comprehensive crypto asset regulatory framework and the first ‘Digital Sandbox’ with a participating regulator.

The ADGM has also emerged as a hub for sustainable finance in the region, supporting the growth of sustainable finance and the acceleration of the UAE’s green economy agenda. With a strong emphasis on transparency and governance, the ADGM has successfully introduced the region’s first comprehensive sustainable finance regulatory framework, encompassing funds, portfolios, bonds, sukuks and carbon-offsets, as well as Environmental, Social and Governance (ESG) disclosures.

The ADGM Growth Strategy 2023-2027 is fully aligned with Abu Dhabi’s goal of driving sustainable economic diversification through the growing financial sector. Last May, ADGM announced a tenfold expansion by bringing Al Reem Island under its jurisdiction, transforming it into one of the world’s largest international financial centres with a total area of 14.38 million sqm.

The growth in the number of operational entities combined with the expansion of existing ADGM-based financial institutions, such as JP Morgan and BNP Paribas, saw a 22% rise in ADGM’s workforce during 2023 to reach 13,394.

“Enhancing Abu Dhabi’s international standing as the ‘capital of capital’, ADGM has truly realised the capital city’s potential for the financial landscape and strategically unlocked opportunities within underlying sectors,” said ADGM Chairman Ahmed Jasim Al Zaabi. “The growth that we are witnessing today is the realisation of the visions of the UAE’s leadership. We remain strongly positive as we move forward into 2024.”

Other significant achievements at ADGM during 2023 included:

• The launch of ADGM’s inaugural Money Laundering and Terrorist Financing (ML/TF) Risk Assessment of ADGM Legal Persons and Arrangements Report (LPA Report).
• The launch of Numou, a digital platform tailored to bridge the funding gap faced by SMEs in collaboration with Al Maryah Community Bank, RAKBANK, Commercial Bank International, CredibleX and Khalifa Fund, which have collectively committed to extend lending up to AED220 million.
• The ADGM Registration Authority (RA) issued an updated version of the Beneficial Ownership and Control Regulations 2022 (BOC Regulations), which repealed and replaced the existing Beneficial Ownership and Control Regulations 2018.
• The ADGM Financial Services Regulatory Authority (FSRA) announced revisions to its Anti-Money Laundering and Sanctions Rules and Guidance (AML Rulebook).
• The ADGM RA published the legislative framework for Distributed Ledger Technology (DLT) Foundations.
• The ADGM Arbitration Centre launched ODR@ADGM, an online dispute resolution platform that hosts a fully digitalised settlement and mediation service.
• The ADGM Academy (ADGMA) achieved the milestone of training, upskilling and reskilling more than 1,000 UAE Nationals for employment in the private sector, including more that 500 graduates from the National Development Programme (NDP).
• The ADGMA Entrepreneurship Programme enrolled over 300 candidates and the first international Student Challenge was presented at the SWIFT International Banking Operations Seminar (SIBOS), a global financial services event.
• ADGMA signed 82 strategic partnership agreements, including two international partnerships and five partnerships for research and innovation. It also signed 19 Memorandums of Understanding (MoUs) to explore future alliances with both academic and corporate entities.

How can Sovereign assist?

Establishing a company within the ADGM free zone can be a complex process. Sovereign Corporate Services has an office in the ADGM and was recognised as the first licensed ‘Corporate Services Provider’ within the ADGM regulatory framework.

Our team offers comprehensive support to any business establishing a legal entity in ADGM and can provide direct access to government entities and regulatory bodies. We will provide guidance and expertise throughout the process and will review applications before submission to ensure that your structure meets all business and regulatory requirements.Top of Form