Hedge fund hot spots: Mayfair, Greenwich, and…Qatar
Hedge fund managers are known for setting up outside the main centers of finance: Mayfair, not the City of London, Greenwich, Connecticut, not Wall Street, the tiny Swiss town of Zug. However, if local regulators have their way, the next hot spot will be the Gulf state of Qatar.
Qatar is attempting to carve a niche for itself as the Middle Eastern centre for asset management. The first phase is attracting institutional asset managers, something it’s had mixed success with, and the second will be encouraging them to set up middle and back office functions. Oh, and buying hedge funds.
Yousuf Al-Jaida, chief strategic development officer of Qatar Financial Centre, told MENA Fund Manager that it would be “going out and buying hedge funds and relocating them to Qatar.”
The state is not shy when it comes to splashing the cash – Qatar Holding recently bought London's Park Lane hotel, and the sports division of its $60bn sovereign wealth fund the Qatar Investment Authority took over football team Paris St Germain in 2011 and has been bulking up with star players since.
It’s no Dubai when it comes to lifestyle, however, and has often proved a Hard sell for expat financial services professionals. Credit Suisse, for instance, has shifted some investment banking functions from Dubai to Qatar, but struggled to convince its staff to move.
Peter Hughes, group managing director of hedge fund services firm Apex Fund Services which has offices in Dubai, Abu Dhabi and Bahrain, said, “It’s more difficult to persuade hedge fund professionals to move to Qatar, as the lifestyle is much more restrictive than places like Dubai. Qatar has focused on bringing in big name fund managers in the hope that others will follow suit, and is taking the same approach with hedge funds, albeit a more direct route.”
Barclays, for instance, has been shifting portfolio managers to Qatar for a number of years, while Axa Investment Management also has a small distribution team on the Peninsula.
However, just as hedge fund managers gravitated to Switzerland to escape the 50% top top rate of income tax in the UK, many could be tempted by a few years in tax-free Qatar. Nigel Sillitoe, chief executive officer at Middle East fund management research firm Insight Discovery, believes that Qatari regulators only want people who can commit in the long-term.
“The regulators in Qatar have attempted to bring in some big name fund managers that they have a connection with, in the hope that others will follow, and are clearly doing the same with hedge fund managers,” he said. “However, why it may be tempting from a career perspective, persuading the wife and family to move with you is a different matter.”
One of the main issues any hedge fund manager with a family will face is gaining a place in one of the elite expat schools in Qatar, said Sillitoe: “It doesn’t matter how many millions you have, you can’t buy your way past the waiting list. I also don’t envy any hedge fund manager trying to persuade their wife to ditch the glamour of London or New York.”
This problem is not unique to Qatar, with hedge fund wives supposedly turned off by the lifestyle in Switzerland, which includes the lack of school places as well as the alleged unfriendliness of the natives.
Nonetheless, Al-Jaida believes it’s just a matter of time: “Not only are you moving managers, but you are also managing the managers, so you need a pool of analysts on the ground, an entire middle office and back office to do all of the due diligence for these managers who qualify to become part of the platform. We hope to end up with a platform of maybe 10-15 managers, with a billion or a billion and a half under management.”