In this article, Ogier’s Cayman funds experts in Dubai explain how Cayman fund vehicles are aligning with UAE investment ambitions, providing investors with access to a broad range of asset classes, while supporting a growing shift from reactive to proactive risk management.
Why are UAE-based investors using Cayman structures?
Cayman funds are attractive to global investors, which is why they are consistently being used by managers based in UAE financial centres, especially the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).
Cayman structures are popular because they offer flexibility and regulatory familiarity, helping to bridge regional investment objectives with international standards. Their tax neutrality, particularly when combined with the UAE’s favourable tax regime, also allows for efficient cross-border investment.
Regionally established parallel feeder fund structures are increasingly common alongside Cayman domiciled funds, particularly for ADGM funds with sovereign wealth anchor investors. In these arrangements, a Cayman feeder operates alongside an ADGM fund, which attract and aggregate capital from a diverse international investor pool.
Cayman fund vehicles and UAE investment trends
UAE investment activity is increasingly shaped by the next generation, prioritising diversification beyond traditional assets such as real estate, gold and government bonds. We are seeing investors in the region embracing alternative asset classes including private equity, venture capital, blockchain and cryptocurrencies. Investors are also showing interest in emerging sectors such as logistics, data centres and healthcare.
Crucially, these trends are leading to an increased use of Cayman fund vehicles given that Cayman’s fund regime is extremely flexible in respect of the assets that it can choose to invest in. For example, Cayman structures allow UAE investors to channel capital efficiently into both traditional and innovative asset classes, supporting the diversification and growth strategies now central to the local market.
There has also been a clear move from reactive to proactive risk management, with family offices and managers using Cayman fund vehicles to anticipate and manage risks, innovate and capitalise on opportunities, rather than simply responding to challenges as they arise.
A brief overview of Cayman fund vehicles
The main Cayman fund vehicle structures used include:
- Exempted Companies – the most popular choice for open-ended funds, providing a separate legal personality, limited liability and ease of administration
- Exempted Limited Partnerships (ELPs) – these structures are favoured for private equity and venture capital, delivering a partnership model with tax transparency
- Segregated Portfolio Companies (SPCs) – these enable asset and liability segregation for funds employing multiple strategies or serving various investor types, suited to multi-strategy or umbrella funds
It is worth noting that legislation in the Cayman Islands permits investment funds to be established as Unit Trusts or Limited Liability Companies, although such structures are less frequently used by UAE-based managers.
Dominic Athwal is counsel in Ogier’s Investment Funds and Banking and Finance teams in Dubai.
