Why Dalio, CZ And Other Billionaires Are Flocking To Abu Dhabi

Hedge fund maestro Ray Dalio calls the United Arab Emirates a “renaissance state” — rather for financial reasons than human rights factors.

He and dozens of billionaires are willing to overlook the moral maze for a safer — and cheaper — place to barricade their wealth.

Dalio and Changpeng Zhao — or CZ, the world’s richest cryptocurrency titan — are among the many high-net-worth individuals to park their investments in Abu Dhabi-based special purpose vehicles (SPVs) this year, according to data gathered by Bloomberg.

An SPV is essentially a holding company most commonly used to isolate assets that companies, or individuals, don’t want to appear on their balance sheets.

Also Read: Why Did Goldman Use An SPV For Facebook?

Market Growth

There’s not a lot of exposure through markets to the vast wealth of the UAE, or its capital’s flagship enterprise zone, the Abu Dhabi Global Market (ADGM).

Although it has been on something of a downtrend since 2022, the iShares MSCI UAE ETF UAE, which tracks the investment results of an index composed of UAE equities, is up 78% since early 2020.

The ADGM is now home to around 5,000 SPVs, according to data compiled by M/HQ, an advisory group that helps set these investment vehicles up. In 2016, ADGM had just 16 SPVs.

Attractions Of Low Tax And Minimal Regulatory Scrutiny

So why the sudden popularity? It’s likely tax. Other tax-haven jurisdictions such as the Cayman Islands and British Virgin Islands have witnessed falling corporate registrations as their tax regimes have come under greater scrutiny.

The UAE operates double tax treaties with other countries, which can help the wealthy SPV owner minimize their tax bill for holdings within the SPV.

And there are no problems with citizenship. As long as you’ve got the dollar, you’ve got long-term residency. Zhao holds dual Canadian and UAE citizenship.

The Binance boss, who was fined $50 billion out of his wealth in a total settlement of $4.3 billion, bought a home in Abu Dhabi in 2021 because he admired the country’s pro-crypto policies – or lack of regulations.

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