Fund managers hoping to access increasingly sought after LPs in the United Arab Emirates, such as the Abu Dhabi Investment Authority, must first gain the approval of local regulators to market their private equity and real estate funds.
In the past there was an informal acceptance that permitted discreet marketing to sophisticated investors from foreign private equity and real estate funds without prior approval.
The UAE Securities and Commodities Authority (ESCA) will however exempt GPs from regulatory approval processes if the fund were to be promoted by a local bank or investment company licensed by the country's central bank. Representative offices of foreign firms may also act as a “local promoter” when marketing to institutional investors with a minimum subscription amount of AED10 million (€2.2 million; $2.7million).
Notably, the local promoter must act in a way that “guarantees the protection of the money paid by investors”. This liability was dialed back from an earlier draft of the rules which would have required promoters to indemnify UAE investors against all non-commercial risk.
Under the rules domestic private equity and real estate funds must provide marketing documents in Arabic, although in certain instance an English version may be provided. The rules also make clear that the ESCA will have oversight of the country's fund industry, which in practice it has done for some time, despite the UAE Central Bank's formal designation of the job.