Greece may be emerging as a potential new base for hedge fund managers, but the country faces a formidable rival in the UAE, where years of investment have created a deep pool of institutional capital and an established financial-services ecosystem, according to a report by Bloomberg
The push to attract hedge fund talent to Greece has gathered momentum, with Rokos Capital Management founder Chris Rokos switching his tax residency from the UK, while Millennium Management is preparing to establish its first Greek office. Verition is also considering a presence in the country.
The developments come as fund managers and wealthy investors reassess their UK bases following changes to the country’s tax regime for non-domiciled residents. Greece is pitching a combination of favourable taxation, European lifestyle and a location outside the Middle East conflict zone.
For the UAE, however, the emergence of Athens as a competing destination highlights the strength of the financial centre it has spent years developing.
Abu Dhabi has around $1.8tn in sovereign wealth, while Dubai is home to more than $1tn of private capital, providing hedge funds with access to a substantial institutional and private-investor base.
The Gulf’s geopolitical tensions have nevertheless prompted some firms and executives to reconsider their exposure to the region. The UAE’s response has been to maintain and strengthen its position as a financial hub, while providing flexibility to firms dealing with disruption.
Several of the hedge funds now exploring Greece already have significant operations in the UAE. Millennium employs more than 100 people in Dubai and has indicated that it intends to retain an office there, despite examining alternative locations for employees who may be reluctant to remain in the emirate.
Verition, meanwhile, plans to extend its Dubai lease for five years and expand its broader Middle East operation. Rokos is also moving ahead with plans for an Abu Dhabi office, underscoring the fact that the firm’s interest in Greece does not necessarily represent a withdrawal from the Gulf.
The UAE’s appeal extends beyond tax considerations. Its financial centres have developed the regulatory infrastructure, talent pool and connections with institutional investors that large hedge funds require.
Citadel’s decision to establish a Dubai operation is another indication of the market’s growing importance. Dubai now has more than 100 hedge funds registered in its financial centre, with more than 80 managing over $1bn, according to the report.
Abu Dhabi has been building a parallel hedge fund cluster through its Abu Dhabi Global Market, with Brevan Howard among the largest established managers in the emirate. The firm employs roughly 150 people in Abu Dhabi, which has become its largest risk-taking centre.
The capital available to managers is another significant advantage. Abu Dhabi Investment Authority has been increasing its engagement with hedge funds, while Abu Dhabi Investment Council and other institutional investors have also stepped up allocations.
Lunate has taken a stake in Brevan Howard and committed $2bn to one of the manager’s investment platforms, while Abu Dhabi’s institutional investors have backed a growing number of hedge fund strategies.
Other prominent industry figures have also established links with the UAE. Ray Dalio set up a family office in Abu Dhabi, while commodity investor Pierre Andurand moved to Dubai earlier this year.
The UAE has also continued to attract financial firms despite the regional conflict. Dubai International Financial Centre and Abu Dhabi Global Market have maintained their expansion, while regulators have sought to give financial firms greater flexibility in managing the operational impact of the conflict.
That resilience could make it difficult for Greece to convert interest from individual hedge fund principals into a broader institutional shift.
Athens may be able to attract managers and senior executives looking for a European alternative to London, particularly those prioritising tax treatment and lifestyle. Building the wider ecosystem of capital, counterparties, talent and financial infrastructure required by large hedge funds will be a considerably bigger challenge.
