Interview with Kevin Birkett (pictured), DIFC Authority – Dubai International Financial Centre (DIFC) is an onshore financial hub in the UAE, and is, location-wise, the perfect gateway for fund managers trading markets both West and East. Although only eight years old, DIFC has come a long way in a short space of time.
Although it is still early days in terms of DIFC competing with more established onshore domiciles like Ireland and Luxembourg, Kevin Birkett, managing director-business development, DIFC Authority, is quick to stress that DIFC is more than just a funds centre, noting that 18 of the top 25 global banks now operate there:
“There are currently more than 30 buildings within DIFC hosting over 300 global firms: that we’ve managed to achieve this so quickly, I believe, shows that we are doing something right. Indeed, the chairman of the DIFC Authority, Abdul Aziz Al Ghurair, recently announced plans to double the size of the business in the next five years. We are hiring staff and putting more budget into doing global events to raise our profile and build on our good reputation,” says Birkett.
The aim, says Birkett, is for DIFC to become one of the true international players where global companies come and interact with each other: “In that sense we really are aspiring to the London/Singapore model.”
Of course, building out its funds industry is an integral piece of the puzzle.
In terms of fund numbers being authorised by DIFC’s financial regulator, the Dubai Financial Services Authority (DFSA), Birkett observes that they remain steady although 2012 has “certainly been stronger than last year”.
Indeed, there are several compelling reasons for why investment managers might wish to look at Dubai as an alternative jurisdiction for registering new fund vehicles. Firstly, it has an excellent physical infrastructure. Then there’s the Dubai lifestyle – great climate, safe place to live, excellent education and healthcare facilities.
“Importantly, we have our own legal system. DIFC law is based on common law of England and Wales, which means our courts are well placed to handle both litigation and arbitration cases. In addition, DIFC has highly robust regulation. The DFSA regulations have many similarities with the UK Financial Services Authority,” says Birkett.
It is also important to note that just because of its location, DIFC is not trying to shoehorn managers into only launching Shariah-compliant funds. It is taking an open architecture approach to developing its onshore market, aided by the fact that DIFC’s Companies Law is efficient in supporting a range of fund structures.
“We’re not trying to reinvent the wheel here. We want to encourage an open fund architecture provided each component (i.e. fund structure) can demonstrate solid regulation,” says Birkett.
Good news then for managers who, in addition to perhaps having a DIFC-registered fund, might also choose to launch offshore Caribbean feeder funds from the region. Flexibility is always a key attribute to any successful jurisdiction, as places like Singapore have demonstrated.
As for the application process for those wishing to have DIFC-registered funds, the Centre has its own team of relationship managers to help clients from day one through to full set-up in the office. “Our financial services team will soon expand to nine people. The DFSA takes, on average, about four months to grant approval for a new firm, which I would estimate is broadly in line with most other jurisdictions.”
One key issue that needs to be resolved is whether the Emirates Securities and Commodities Authority (ESCA) will allow managers to market DIFC-registered funds to other parts of UAE such as Abu Dhabi. This is causing confusion for managers but Birkett confirms that DIFC is actively addressing the issue.
“It is important to find a way to work together and get clarity on the issue. It is not in the best interest of the UAE for the current situation to continue.”