Abu Dhabi shows its finance ambitions

Abu Dhabi is recruiting investment companies that will allow the capital to develop into a major international hub for financial services.

Three financial companies have announced expansion plans in Abu Dhabi in the past month, and more could be on the way as the capital looks to move beyond its traditional focus on property development, banking and tourism.

"There is a lot of wealth available but it gets spent elsewhere and the financial side is not well developed in Abu Dhabi," says Laurent Depolla, an executive director of Mubadala Services Ventures.

By building a cluster of complementary firms, it is hoped that more money belonging to wealthy individuals and even sovereign wealth funds will be managed and invested out of Abu Dhabi.

Mubadala Real Estate and Hospitality helped to finance and develop Sowwah Island, a 114-hectare commercial development behind Abu Dhabi Mall that is designated to be the city's central business district. The new headquarters of the Abu Dhabi Securities Exchange will be on the island.

Mubadala Services Ventures and Mubadala Real Estate and Hospitality are divisions of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.

Rashed al Baloushi, the bourse's deputy chief executive, says the new building will be "the heart" of the island and a major step towards creating a financial hub on similar lines to London and New York.

"Who has the best rules, regulations and financial instruments? We all know that's London, so this [move] is an opportunity [to emulate that]," Mr al Baloushi says. The stock market is on course to introduce more complex financial instruments this year as part of the strategy.

But the exchange needs complementary financial services companies around it to meet all the varied needs of Abu Dhabi investors.

To that end, Falcon Private Bank, a Swiss bank owned by Abu Dhabi's Aabar Investments, is scheduled to open an office in the capital in April. Mubadala Services Ventures announced a joint venture with Mesirow Financial, based in Chicago, to offer risk management in commodity and currency markets in the capital.

ADS Holding, an investment firm owned by local investors, meanwhile, says its ADS Securities operation intends to be one of the first tenants of Sowwah Island. "If we wait until that centre is up and running, everybody will be setting up and crowding the place," says Mahmood al Mahmood, the company's chief executive.

Launched last year, the brokerage aims to take advantage of Abu Dhabi's geography by capitalising on the four-hour "time-zone gap" between when Asian markets close and European markets open. After four months of trading, the brokerage has already notched up more than US$2 billion (Dh7.34bn) a day in financial instruments and commodities. Mr al Mahmood says he believes Sowwah Island will further Abu Dhabi's evolution into a trading hub for the region.

The Mubadala partnership with Mesirow Financial is also a move to expand into asset management in the country, which has been traditionally dominated by international firms, says Mr Depolla. The venture is part of a "management cluster" of businesses that Mubadala is eyeing to build up in Abu Dhabi.

Mr Depolla points out that Mubadala is looking for more partnerships with financial services companies. Although he did not disclose where the partnership with Mesirow Financial would be headquartered, Mr Depolla says Sowwah Island is "naturally advantageous" for financial services businesses.

Falcon bank has had an office in Dubai since 2008, but Zafar Khan, the chief executive for the Mena region at the bank, has big plans for the capital.

"Abu Dhabi is the fastest-growing city in the world; it has the highest per capita GDP and is one of the most economic and stable cities economically right now," says Mr Khan. "It offers a lot of opportunities and you can see it through our performance in the UAE."

Last year, the bank's first year of operation in the UAE, Falcon accumulated $400 million of assets under management.

Although Falcon's Abu Dhabi office is scheduled to open on the Corniche, this is just a "first step" with Sowwah Island firmly on the agenda, he says.

"That island is created to bring in the best names of the world and Falcon would like to be where everyone is."

After living in the country for 18 years, Mr Khan, who was the chief investment officer at First Gulf Bank before joining Falcon, is an Abu Dhabi enthusiast. "It is my home town plus being a bank owned by an Abu Dhabi entity, it makes sense to have our main office here," he says.

* additional reporting by Bradley Hope

fhalime@thenational.ae