Prime moves: what it takes to set-up a hedge fund in the UAE

If you’re on the cusp of launching a hedge fund here, expanding your footprint into the region, or relocating, one thing becomes clear early: this is a market with its own rules, rhythms and expectations. The regulatory, structural and operational landscape has its own nuances, and the decisions you make early on – around licensing, structuring, fundraising and infrastructure – will shape how credible, scalable and investable your fund looks to the outside world.

Most of the managers we speak with at this stage fall into a similar profile. They’re lean teams – often first-time GPs or spinouts from larger platforms – focused on delivering performance and raising early capital. They’re looking for fast, cost-efficient ways to validate their strategy, without unnecessary infrastructure or overhead. And they know that early investor confidence depends not only on what they trade, but how they run the fund.

Before we dive into the key decisions, it’s worth highlighting the one critical dimension that shapes success here:

Understanding the cultural and business environment

Doing business in the Gulf is deeply cultural and relationship-led. Personal rapport, trust and respect for local customs are foundational.

Earning it takes time, commitment, visibility and consistent local engagement – whether through regular visits, local advisory boards or in-region representation. Business decisions often involve senior-level stakeholders and respect for formality, hierarchy and reputation is essential. Meetings often begin with personal conversation, and while English is widely used, Arabic greetings, phrases or culturally adapted marketing materials are often appreciated.

Islamic values shape the rhythm of business life. Prayer times, Ramadan schedules and national holidays must be respected. During Ramadan, for example, working hours shorten, and evening social gatherings become more central to relationship building. These nuances aren’t just courtesies – they signal respect and a long-term commitment to the region.

With that context in mind, here are four strategic decisions that will shape your success when setting up in the UAE.

1) Choosing the right regulatory pathway

One of the first forks in the road is deciding where to set up. Unlike most jurisdictions, the UAE doesn’t offer a single regulator. Instead, you’re choosing between multiple authorities, each with distinct licensing routes, costs, capital requirements and expectations.

The two most common are:

• Dubai International Financial Centre (DIFC) regulated by the Dubai Financial Services Authority (DFSA)
• Abu Dhabi Global Market (ADGM) regulated by Financial Services Regulatory Authority (FSRA)

Both are internationally respected, but they differ in approach and infrastructure. Your choice can influence not just your time to market, but how investors perceive your setup.

And while these frameworks are well documented, the reality of navigating them as a lean team is less straightforward. Subtle differences in operational substance rules, approval timelines or even office space availability can materially impact your launch. This is where local context and experienced partners make a real difference.

2) Structuring the fund to support growth

After jurisdiction comes structure – and it’s more than a legal or compliance formality. This is a capital raising decision as much as a regulatory one. Should you launch a UAE-domiciled vehicle, or opt for an offshore structure such as a Cayman SPC or Luxembourg RAIF?

There’s no single right answer. Some allocators are more comfortable with familiar offshore frameworks. Others, particularly regional LPs, often favour UAE-regulated funds with a clear local footprint.

But this decision goes far beyond perception. Your structure shapes your tax profile, defines your reporting obligations, and can either enable or restrict your ability to scale. Too many funds choose the fastest or cheapest option, only to encounter friction with investors later or find themselves boxed in operationally.

Your structure needs to support your ambitions, not just your launch date. In other words, it’s not admin. It’s strategic.

3) Raising capital in a relationship driven market

There’s no shortage of capital in the UAE and the broader Gulf. Sovereign wealth funds such as ADIA, Mubadala and ADQ – along with a growing network of sophisticated family offices and allocator platforms – are active, well-resourced and increasingly global in their outlook. However, they are highly selective and expect more than a compelling investment thesis.

In this market, investors are looking for long-term partners, not just managers. That means demonstrating that you’re operationally sound, institutionally credible and culturally attuned to how business is done in the Gulf. Relationships and trust outweigh slick pitchbooks, and personal connections, referrals and cultural alignment can have more influence than performance metrics.

Capital allocators here typically engage at senior levels, and decisions take time and deliberation. Relationship managers or advisors with local standing can play a critical role in opening doors and accelerating trust-building.

Many UAE-based ultra high net worth individuals and family offices often favour custom mandates, separately managed accounts, co-investment opportunities and direct access to fund managers. Flexibility, transparency and personalised service go a long way in strengthening investor relationships.

Ultimately, they’re investing as much in you as they are in your strategy.

4) Building infrastructure without overbuilding

In the early stages, managers often face a tough balancing act. Some overbuild too quickly; setting up costly, oversized infrastructure that drains seed capital. Others under-invest and fall short of what institutional allocators expect.

The key, especially in the UAE context, is to start lean but credible. Investors here are highly sophisticated and expect infrastructure that reflects institutional standards, even if you’re early in your journey. That means having the right service providers, clear governance structures and operational systems that are scalable but not excessive.

For Gulf-based investors, infrastructure is more than a functional necessity, it’s a signal of commitment and professionalism. You may not need a 10-person ops team on day one, but you will need access to global markets, robust risk and compliance processes and, most importantly, transparent reporting – all of which need to stand up to scrutiny from top-tier allocators.

Where prime brokerage makes a difference

For emerging managers in the UAE, the right prime broker can play a defining role – not only in the mechanics of trading, but in how you launch, grow and scale your business.

From helping you weigh up the regulatory options and connect with trusted service providers, to setting up institutional grade infrastructure and supporting early investor conversations – a prime broker plays a strategic role long before the first trade is placed.

Not all providers are set up for this. Some focus purely on scaled clients; others don’t have regional presence or cross-border experience. The best partners understand what it means to launch in the UAE and have the infrastructure and relationships to support you through it.

The local advantage

At Marex, we’re among the few full-service prime brokers with experts on location in the UAE. That matters, because setting up here is about understanding how the fund structures really work in practice. It’s about knowing who to call, which steps to take, and which shortcuts aren’t worth the risk. It’s about being in the room, not just on the call.

For funds launching under local or offshore frameworks, we provide institutional tools, multi-asset execution, global market access and the practical experience to help you launch with confidence.

If you’re planning to launch in the UAE or if already in motion and want a partner that understands this market, we’re happy to talk.

For more on how our prime brokerage team can help you, click here.