Putting The Abraaj Scandal Behind It, DIFC Looks To The Future

Dubai International Financial Centre (DIFC) CEO Arif Amiri has said that the implosion of the developing world’s largest private equity fund last year has had no real effect on the financial hub’s business and that it continues to expect to grow in the coming years.

“In terms of numbers, no. Our numbers are extremely good,” Amiri told Arabian Business when asked about any impact The Abraaj Group’s collapse last year might have had.

When asked if there was an impact related to perception or the prestige of DIFC, Amiri said, “Look, things happen everywhere, including in London or the rest of the Europe. And we’re a global financial hub.”

The largest financial hub across the Middle East, Africa and South Asia, DIFC’s in its latest press call announced seeing 437 new business registrations in 2018, the largest in its history, growing its roster of active registered companies to 2,137.

DIFC’s net profit also grew by 11 percent to $88 million in 2018, excluding any gains realised from increases in the fair value of its assets. The size of its wealth and asset management sector now stands at $424 billion.

The results come despite challenges last year that included a slump in the real estate sector, a scandal emerging from financial malfeasance at The Abraaj Group, and an increase in the marketing efforts of others in the region such as Bahrain’s Fintech Bay that is vying for a share of DIFC’s future pie.

“Our challenges aren’t necessarily cost pressures,” Amiri said referring to the current slump in the real estate sector that could see asset values in the city drop by up to 20 percent over the next two years according to analysts including S&P Global ratings.

“We’re at 98 percent occupancy right now. And that’s mostly because as a financial centre, for us our efforts are focused on the depth of business that happens here. So for instance we’ve seen a tripling in the size of banking balance sheets in the span of three years, and that’s huge. Our assets under management are now at about $400 billion, and that helps indicate the depth of activity at the Centre. That then translates into other KPIs such as people employed and real estate occupied,” he said.

“I’m a glass half full kind of guy. And the current real estate market actually helps us look even more competitive,” he said.

At the Global Financial Forum (GFF) held earlier this week, DIFC appointed Middle East Venture Partners and Wamda Capital to jointly manage part of its $100 million Fintech Fund that will accelerate the development of financial technology in the region by investing in start-ups from incubation through to growth stage.

Fintech-based companies will be a key component of DIFC’s growth over the next few years, according to Amiri.

“We want to cater to the future of finance which we believe will be an instrumental part of our proposition at DIFC. We’ve already seen a few initiatives over the last couple years, including the Fintech Hive as well as an incubation bootcamp, as well as the fintech fund which will cater to a wider spectrum of companies in the segment from Dubai for the region which will fuel their growth,” he said.

DIFC’s Fintech Hive initiative, launched in partnership with Accenture in 2017, has doubled in terms of startups registered last year to become region’s largest accelerator in its realm. At the GCC, DIFC signed MoU’s with similar aspirants in Saudi Arabia, Italy and Turkey who want to replicate at least some of the success DIFC has had with accelerating companies that want to provide technology-based solutions to companies in the financial services industry.

“We are the New York of the region,” said Amiri referring to the DIFC’s share of GDP that it attracts. “There will be others trying to be a DC or Chicago of the region, and we all complement one another, but we don’t see them as competition, really." 

“What we’re doing differently is providing solutions and products for our customer base to enjoy. For instance, we offer licensing options for businesses out of the Fintech Hive and that’s something we never had before. That will allow businesses to eventually grow into the next HSBC, Citibank or even Berkshire Hathaway maybe,” he added.