Recently the Securities and Commodities Authority (the “SCA”), the market regulator of the United Arab Emirates (the “UAE”), posted amendments to its marketing rules that should make it easier for private equity firms to solicit sovereign wealth fund commitments in the UAE and should simplify the marketing strategies of fund managers seeking to market their funds to investors in the UAE.
These amendments provide that private equity firms are not required to obtain SCA approval when soliciting investments from institutional investors in the UAE. According to local counsel, these amendments provide that private equity firms will no longer need to use an SCA licensed placement agent and are not required to obtain SCA approval when soliciting investments from sovereign wealth funds, financial managers and certain institutional investors in the UAE.
However, the UAE has taken a more restrictive view on reverse solicitation based on pre-existing relationships with an investor. The amendments also provide that even if a potential investor provides a fund manager with a letter stating that is taking the initiative in requesting marketing materials from a fund manager, the SCA will still have the power to determine whether the facts presented in the letter are consistent with the reality of the event.
Private equity firms marketing in the UAE should identify the types of investor that they wish to target in the UAE to determine whether they need to instruct a locally licensed placement agent and seek approval for a fund to be marketed. When soliciting investments from non-institutional investors, private equity firms should be careful if relying on the reverse solicitation exception.