(Bloomberg) -- Paul Marshall slammed Britain’s high taxes and regulatory red-tape in an interview in Abu Dhabi, where he also unveiled plans to set up a new office for his hedge fund.
“I wanted to say a little about why Abu Dhabi is such a great place,” the co-founder of Marshall Wace told former UK Chancellor Sajid Javid at the emirate’s annual finance conference. The comments came after his $69 billion firm became the latest hedge fund to open up in the city.
“I am making a comparison with London because we both are Brits and you are a former chancellor,” he said, before listing out the tax benefits in Abu Dhabi. Marshall Wace is one of London’s biggest hedge funds.
“Income tax: Britain 45%, Abu Dhabi zero; capital gains tax: Abu Dhabi zero, Britain’s just gone to 24,” Marshall said. “So in terms of tax, Abu Dhabi is absolutely nailing it. It’s a very attractive place.”
Javid interjected to clarify some of the tax increases came after his stint as finance minister. He was chancellor for a short period in 2019 and 2020 before leaving after a row with then Prime Minister Boris Johnson. Last year, he joined London-based Centricus Asset Management Ltd. as a senior adviser.
Incumbent UK Chancellor Rachel Reeves presented a budget in October that included £40 billion of tax rises, impacting businesses and the wealthy in particular. While she didn’t make changes to the country’s income tax regime, she raised the lower rate of capital gains tax to 18% from 10%, and the higher rate to 24% from 20%. The bulk of increased taxation came in the form of a higher payroll tax on employers.
That’s prompted a charm offensive from places like Abu Dhabi, which see an opportunity to lure away the UK’s rich foreign residents, known as non-doms. The United Arab Emirates capital has already drawn the likes of hedge fund billionaire Ray Dalio, Czech tycoon Radovan Vitek, Egyptian magnate Nassef Sawiris and the richest man in crypto Changpeng “CZ” Zhao.
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Earlier this year, Marshall agreed to buy the politically influential British magazine, The Spectator, for £100 million ($131 million) in a deal that made him one of country’s most influential media moguls. He was also actively pursuing a takeover of The Daily Telegraph and Sunday Telegraph, Bloomberg News has reported.
‘Starting Small’
Marshall Wace’s expansion into Abu Dhabi coincides with a broader shift in wealth and asset managers to the city, which is home to one of the world’s richest families and sovereign wealth funds that manage about $1.7 trillion. Other draws include a time zone that allows trading across multiple markets.
Marshall said his hedge fund’s head of emerging markets will be based in Abu Dhabi. “We are starting small but I think we are going to grow pretty fast,” he told Javid. “From here, what we are doing is public investing into the region and that includes India.”
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In Abu Dhabi, Marshall Wace will join London-based peer Brevan Howard Asset Management that’s made the emirate its biggest trading hub and has sent dozens of staff to help run billions of dollars from there.
Neighboring Dubai, too, has made a push to draw some of the biggest names from the industry. The city now hosts local offices of close to four dozen firms with assets exceeding $1 billion each, and the industry employs more than 1,000 people.
During his conversation with Javid, Marshall also pointed to regulatory “clarity and dynamism” in the UAE as the country’s key advantages.
“If I compare this country with what’s happening in Britain and Europe, it’s just not there,” he said. “The UK could have diverged in terms of having more regulatory dynamism but it hasn’t. There’s the saying: US innovates, China replicates, Europe regulates — and that’s where we are.”
Marshall Wace, founded by Marshall and Ian Wace and part owned by private equity firm KKR & Co., is best known for running equity long-short strategies. Its flagship $22 billion Eureka hedge fund was up about 14% through November this year.
--With assistance from Alex Morales.
(Updates throughout with Paul Marshall’s comments)
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