Other BriefingsWhy UAE Is Becoming a Strategic Hub for Canada Investment Funds
Investment ties between Canada and the UAE are deepening, driven by new trade negotiations, bilateral capital flows, and strategic location.
Canada–UAE investment relations are entering a phase of accelerated expansion, reflecting a broader realignment of global capital flows toward the Gulf. Recent high-level engagement between Ottawa and Abu Dhabi, including the Canada–UAE Investment Summit held in November 2025, has reinforced bilateral economic ties and laid the groundwork for deeper cooperation.
The signing of a new bilateral investment treaty and the launch of negotiations for a Canada–UAE Comprehensive Economic Partnership Agreement (CEPA) mark the most significant upgrade in economic relations between the two countries in over a decade.
For Canadian private equity and venture capital fund managers, this evolving relationship presents a timely opportunity. The UAE is no longer merely a destination for outbound capital; it is increasingly positioning itself as a global platform for capital formation, regional expansion, and institutional investment. Establishing a presence in the UAE enables Canadian fund managers to access Middle Eastern sovereign wealth, family office capital, and a rapidly growing regional innovation ecosystem, while utilizing the country as a base for expansion into the Middle East, Africa, South Asia, and Central Asia.
This strategic shift is already visible, with a growing number of North American funds establishing operations in the Abu Dhabi Global Market (ADGM). Alongside the Dubai International Financial Centre (DIFC), these two financial free zones are emerging as preferred jurisdictions for international fund managers seeking proximity to Gulf capital and policymakers. Their rise reflects a broader recalibration of global fund domiciliation strategies toward jurisdictions that combine regulatory credibility with geographic and geopolitical relevance.
Canada–UAE economic relations
Canada and the UAe marked 50 years of diplomatic relations in 2024, underpinned by increasingly robust trade and investment ties. Bilateral economic engagement has expanded steadily in recent years, reflecting growing commercial alignment and mutual interest in deepening cooperation across multiple sectors.
In 2024, total bilateral merchandise trade reached approximately US$3.4 billion. Canadian exports to the UAE accounted for around US$2.6 billion, representing a year-on-year increase of 24 percent, while imports from the UAE totalled about US$800 million. Trade in commercial services has also gained momentum, with bilateral services trade reaching US$388 million in 2023.
Investment flows further highlight the depth of the relationship: Canadian direct investment in the UAE stood at US$242 million in 2024, while UAE foreign direct investment (FDI) in Canada reached approximately US$8.8 billion, underscoring the UAE’s role as a significant source of inbound capital.
Political momentum has reinforced these economic ties. On November 20, 2025, Mark Carney and Sheikh Mohamed bin Zayed Al Nahyan announced the intention to launch negotiations toward a CEPA. Expected to commence in 2026, the proposed CEPA aims to liberalize further trade and investment flows between Canada and the UAE, providing a formal framework to support deeper commercial integration and long-term economic cooperation.
Why the UAE is becoming a priority market for Canadian fund managers
Several structural drivers are pushing the UAE to the forefront of Canadian global investment strategies. First, the country sits at the heart of a highly concentrated sovereign capital ecosystem serving not only the UAE, but also Saudi Arabia, Qatar, Kuwait, and Oman. Collectively, regional sovereign wealth funds and institutional investors manage trillions of dollars in deployable capital and are accelerating investment across infrastructure, energy transition, digitalization, and advanced industrial sectors.
For Canadian fund managers, a local presence in the ADGM or DIFC enhances credibility and visibility with these investors. Establishing regulated operations in the UAE signals long-term commitment to the region and improves access to anchor commitments, co-investment opportunities, and follow-on capital. This is particularly relevant as Middle Eastern investors increasingly favour managers with on-the-ground teams and regional engagement capabilities.
Second, there is strong sectoral alignment between Canadian investment expertise and Gulf development priorities. Across the UAE and Saudi Arabia, national strategies are directing capital toward renewable energy, hydrogen, industrial decarbonization, advanced mobility, and digital infrastructure. Canadian pension-backed funds and private capital managers bring long-standing experience in these sectors, supported by deep technical underwriting and operational capabilities. In parallel, Canadian venture capital firms are well-positioned in climate technology, artificial intelligence, fintech, and industrial innovation—areas that align closely with the region’s diversification and innovation agendas.
Regulatory familiarity and tax efficiency
A key differentiator for the UAE is the regulatory environment offered by the ADGM and DIFC. Both operate under English common law systems, with independent courts and internationally recognised regulators—the Financial Services Regulatory Authority in ADGM and the Dubai Financial Services Authority in DIFC. For Canadian general partners accustomed to rules-based regulatory oversight, these frameworks offer legal certainty comparable to traditional fund jurisdictions such as Luxembourg, Ireland, Delaware, or Singapore.
Importantly, regulators in both free zones adopt a commercially pragmatic approach, with mandates explicitly geared toward growing their domestic funds ecosystems. This has contributed to the ADGM and DIFC increasingly being viewed as global fund domiciliation hubs, particularly for managers targeting Middle Eastern capital.
Tax considerations further enhance their appeal. Both jurisdictions offer tax-efficient structures for investment funds, with no capital gains tax and potential corporate tax neutrality for qualifying income, subject to appropriate structuring. This allows Canadian sponsors to operate regional funds without navigating complex local tax regimes, while maintaining alignment with international tax compliance standards.
Speed, flexibility, and regional reach
The ADGM and DIFC have developed flexible, multi-tiered fund regimes designed for professional and institutional investors, including venture capital funds, exempt funds, and qualified investor funds. These regimes are structured to enable faster fund launches than many traditional jurisdictions.
In addition, foreign fund manager frameworks allow eligible overseas managers to oversee locally domiciled funds without obtaining full local authorization, reducing duplication and regulatory friction.
Beyond capital access, the UAE offers strategic geographic advantages. Abu Dhabi and Dubai are within a four-hour flight radius of more than three billion consumers, positioning the country as a natural gateway to high-growth markets across Africa, India, and Southeast Asia. This regional reach aligns closely with Canada’s Indo-Pacific Strategy, which prioritises deeper economic engagement with South and Southeast Asia.
Structuring options for Canadian sponsors
Canadian fund managers establishing a UAE presence typically pursue one of three structures:
- Feeder funds domiciled in the ADGM or DIFC: Allow Gulf investors to access Canadian flagship funds through familiar regulatory frameworks, simplifying onboarding and compliance;
- Parallel funds: Enable alignment with regional investor preferences, including co-investment expectations and tailored economic terms; meanwhile
- Special purpose vehicles: Provide flexible platforms for deal-by-deal investments, particularly for sovereign investors favouring direct exposure.
Each structure requires careful consideration of tax, governance, regulatory, and marketing rules, particularly given the diversity of securities regulations across Gulf jurisdictions. While the UAE offers passporting arrangements within its own free zones and mainland market, broader regional marketing often requires jurisdiction-specific approvals.
Outlook
Competition for Gulf capital is intensifying. US, European, and Asian fund managers are rapidly expanding their presence in the ADGM and DIFC, recognising that proximity to sovereign investors and policymakers is becoming a prerequisite for sustained capital access. With assets under management in both free zones growing at double- and triple-digit rates, early movers are securing strategic advantages that may become harder to replicate as the market matures.
For Canadian fund managers, the UAE represents more than a fundraising destination. It is emerging as a strategic platform for capital deployment, partnership formation, and regional expansion. Establishing a presence now allows Canadian sponsors to position themselves at the intersection of global capital flows and one of the world’s most dynamic investment regions.
See also: India and Oman Sign Trade Agreement: CEPA Deepens Bilateral Economic Engagement
About Us
Middle East Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Dubai (UAE). Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China (including the Hong Kong SAR), Indonesia, Singapore, Malaysia, Mongolia, Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.
For a complimentary subscription to Middle East Briefing’s content products, please click here. For support with establishing a business in the Middle East or for assistance in analyzing and entering markets elsewhere in Asia, please contact us at dubai@dezshira.com or visit us at www.dezshira.com.
- Previous Article Saudi Arabia’s 2026 Budget: Implications for Construction and Infrastructure Sector
- Next Article
