Abu Dhabi is the world's newest wealth haven for billionaires - Bloomberg

For decades, many of the world’s richest people chose to safeguard their assets in overseas locales from the Cayman Islands to Switzerland to the British Virgin Islands. But a new wealth hub is becoming wildly popular with billionaires – the skyscraper-studded emirate of Abu Dhabi.

Cryptocurrency’s richest man Zhao Changpeng, India’s Adani family, hedge fund billionaire Ray Dalio and Russian steel magnate Vladimir Lisin are among the dozens of high-net-worth individuals who have set up special purpose vehicles (SPVs) in Abu Dhabi’s international financial centre this year, according to a review of hundreds of corporate filings in the United Arab Emirates by Bloomberg News.

More than 5,000 SPVs now exist in Abu Dhabi Global Market (ADGM), compared with just 46 in 2016, according to data compiled by M/HQ, a wealth advisory firm that is among the leaders in setting them up.

It is not publicly known where individual billionaires moved their assets from, why they did so or what each one contains. Yet the wealth influx reflects broad global shifts in how the world’s rich are protecting their money.

Popularised by junk-bond king Michael Milken in the late 1980s, SPVs are separate legal entities that have become go-to structures for high-net-worth individuals seeking to isolate their financial risk.

Abu Dhabi says its SPVs – essentially holding companies that manage wealth – can contain assets such as property and equity.

The financial flows to the UAE mark a new role for its US$509 billion (S$684 billion) economy as the ruling Al Nahyan family attempts to diversify away from oil.

Abu Dhabi’s gains also come at a time when some low-tax jurisdictions like the British Virgin Islands and Cayman Islands have faced greater scrutiny from officials elsewhere in the world and seen a slide in new corporate registrations.

“ADGM is a great place to set up SPVs and it’s increasing sharply,” said Mr Bhaskar Dasgupta, a corporate adviser who previously worked for the Abu Dhabi free zone. “We’re seeing more high-net-worth individuals moving from the BVI (British Virgin Islands), Caymans, Mauritius and Singapore to here.”

Billionaire arrivals

The Middle Eastern business hub is attractive because of its safeguards to ring-fence assets from foreign jurisdictions and the ability to benefit from the UAE’s double tax treaty network, according to people with direct knowledge of the matter.

The UAE’s double tax treaty can help wealthy individuals minimise their tax bill for companies tucked inside the SPV, dependent on whether the additional countries in which they do business have an agreement with the Gulf state.

Wealth advisers and international investors, many of whom spoke on the condition of anonymity, also point to a string of benefits that the emirate offers.

Abu Dhabi and nearby Dubai have become thriving global cities. Those making large investments here are eligible for long-term residency and even in some cases UAE passports, the people said.

Then there are Abu Dhabi’s sovereign wealth funds, which control more than US$1 trillion in assets, and influential private investment firms.

At the same time, the UAE has, in recent years, sometimes been a haven for those navigating regulatory challenges overseas.

Zhao, the former chief executive of digital-asset exchange Binance, bought his first home in Dubai in 2021, citing its pro-crypto policies.

In November, Binance and Zhao pleaded guilty to anti-money laundering and US sanctions violations under a settlement with the United States.

ADGM records show the billionaire set up multiple SPVs in Abu Dhabi this year, including Binary Finance Group Holdings, Alphanest Holdings and CZ Labs Holdings. He has UAE and Canadian citizenship, according to US court records.

The international financial free zone, which was inaugurated in 2015, has also become attractive in recent years because the UAE held off on sanctioning countries like Russia while the US, Britain and European Union ratcheted up their own restrictions.

Meanwhile, Switzerland, Britain and some Caribbean nations have cracked down on people with ties to countries navigating sanctions.

In fact, Abu Dhabi’s structures are increasingly winning the support of the royals themselves.

Subsidiaries of Royal Group, which is controlled by National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, the UAE President’s brother and one of the world’s most influential dealmakers, have set up a number of ADGM SPVs in the second half of this year, according to filings and people familiar with the matter.

Part of Abu Dhabi’s success in wooing more SPVs stems from how the UAE has leveraged its golden visa and passport programmes in the past couple of years, according to Mr Armand Arton, the founder of citizenship firm Arton Capital.

These reforms have encouraged the wealthy to make the Gulf state a more permanent home.

“We see this trend of more billionaires moving to the country,” said Mr Arton.

“Once they feel welcome and safe, they then look to relocate their businesses and assets, with ADGM being one of the preferred places.”