Publication
M&A activity in the Middle East: A global bright spot
In a year where M&A activity in the West was subdued, the Middle East increased its transaction activity.
Middle East | Publication | June 2024
This article was first published in IFN Volume 21 Issue 19 dated the 8th May 2024.
According to the General Council for Islamic Banks and Financial Institutions, the global Islamic funds market has grown by more than 300 per cent over the past decade. The countries of the Gulf Co-operation Council (GCC) and Malaysia are at the forefront of this growth, with the Kingdom of Saudi Arabia (the KSA) and the United Arab Emirates (the UAE) as the major actors in the GCC region for the establishment of fund vehicles with Shari’ah-compliant assets.
In this context, multiple asset management firms are now launching, or planning to launch, Islamic funds as either stand-alone products or as part of a broader investment strategy to complement existing approaches and investors.
The global financial landscape offers a myriad of fund types tailored to meet the diverse needs of investors and asset managers when setting up a Shari’ah-compliant fund vehicle. Particularly, the KSA, the Onshore UAE, the Dubai International Financial Centre and the Abu Dhabi Global Market serve as key jurisdictions for fund formation and management in the GCC. A wide range of fund structures are able to be established and addressed to either public investors or professional investors, as further summarised in the table below:
Comparison table of funds | |||||
Jurisdictions | KSA | KSA | Onshore UAE, ADGM and DIFC | Onshore UAE, ADGM and DIFC | Onshore UAE, ADGM and DIFC |
Types of Fund | Public Funds | Private Funds | Public Funds | Exempt Funds | Qualified Investor Funds |
Practical Use | Regulated vehicle | Regulated vehicle | Regulated vehicle | Unregulated (but subject to prior notification to the authority before being established) | Unregulated (but subject to prior notification to the authority before being established) |
Investors and Offer |
Unitholders include Retail Clients; or Some or all of its units are offered to investors by way of public offering |
Only Sophisticated Investors or investors whose investment is not less than SAR 1,000,000; and Units are offered to persons only by way of a Private Placement |
Unitholders include Retail Clients; or Some or all of its units are offered to investors by way of public offering |
Only Professional Clients; and Units are offered to persons only by way of a Private Placement |
Only Professional Clients; and Units are offered to persons only by way of a Private Placement |
Minimum subscription | N/A | Usually SAR 1,000,000 | N/A | US $50,000 | US $500,000 |
Corporate type | Contractual entity formed between the fund manager and its investors | Contractual entity formed between the fund manager and its investors | Investment company (including umbrella structure) |
GP/LP |
GP/LP |
Liquidity | Liquid | Usually illiquid | Liquid | Usually illiquid | Usually illiquid |
Management entity | Regulated Fund Manager | Regulated Fund Manager | Regulated Fund Manager | Regulated Fund Manager | Regulated Fund Manager |
Publication
In a year where M&A activity in the West was subdued, the Middle East increased its transaction activity.
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