Firms pull out of DIFC

Three firms have asked to have their licences to operate in the Dubai International Financial Center withdrawn, as companies cut back on expansion plans during the worst economic crises in decades. The Dubai Financial Services Authority (DFSA) recently approved the 300th application to operate in the DIFC, but now international firms are exploring cost cutting options, which includes reviewing plans to open new offices. "It's a decision that was made by upper management; it is apparent that funds in the financial industry are being impacted so we have to re-evaluate how to cut costs," said Domluke D'Silva, a director at Alternative Investment Strategies Management in Dubai, which this week received approval to rescind its licence to operate in the DIFC.

"As we are a global firm, this is about how the business is being impacted at a global level rather than in Dubai; we remain very positive on Dubai," said Mr D'Silva. Jefferies International, a full service investment banking and institutional securities firm operating in more than six countries, was also granted approval to withdraw their DFSA licence on Dec. 17, while Wedge Alternatives, dealing with hedge funds and private equity, received approval from the DFSA to cancel their licencse on Dec. 21. Representatives from both firms were not available for comment.

Analysts agree that the economic downturn has discouraged global companies from expanding operations into "exotic" areas. "They are moving out of what is considered exotic or non-local to them," said Ahmad Shahin, a research analyst at Shuaa Capital. [e-mail]