Foundations are becoming a popular tool for families and individuals in the UAE who want to protect their assets and plan for the future. These structures, Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and RAK International Corporate Centre (RAK ICC)) are well-suited for succession planning and holding real estate, investments, and other valuable assets.
The challenge with these structures is that once assets are placed within a Foundation, accessing lending against them can be difficult. Many banks and lenders are still cautious with these structures, and clients often find the process more complex than expected.
At GSB Private, we work with clients to help structure lending arrangements that work within these frameworks. Below are five key points to consider when looking to borrow against assets held in a UAE Foundation.
1. Minimum asset requirements for Foundations
Most lenders require a minimum level of Assets Under Management (AUM) before they will consider this type of loan. A typical starting point is around 2 million US dollars, though this can vary depending on the lender and the overall financial profile of the borrower. Dry lending (mortgages without AUM) is possible, but fewer solutions are available.
2. How much can be borrowed
Loans are usually offered at up to 60 percent of the asset’s value, depending on what the asset is and where it is held. The type of asset, the strength of the borrower’s relationship with the lender, and the structure of the Foundation will all influence how much can be borrowed.
3. Where the foundation is registered matters
Lenders tend to prefer DIFC & ADGM Foundations. These jurisdictions are known for their governance standards and are generally easier to work with from a legal and compliance perspective.
Notably, the Abu Dhabi Global Market (ADGM) has seen significant growth. In the first half of 2024, ADGM reported a 226% increase in assets under management compared to the same period in 2023. Additionally, 112 asset and fund managers now operate in ADGM, managing 141 funds. (source: ADGM Performance Report 2024).
4. Acceptable security
Lenders will usually accept the following types of security:
- Real estate, both in the UAE and abroad
- Investment portfolios, either managed or advisory
- Luxury assets, such as yachts or high-value collections, if properly structured
The Foundation must be able to provide the appropriate documentation, such as board resolutions and legal confirmation of asset ownership.
5. Loan size ranges
GSB can facilitate Foundation Loans beginning from 10 million dirhams and above. Much depends on the asset quality, nature of the lending request and serviceability for the debt.
Private banks and alternative lenders are increasingly open to this type of lending, especially when working with experienced advisers who understand both the structure of the Foundation and the wider financial picture. (source: ADGM Performance Report 2024).
How we can help
Arranging finance through a Foundation structure requires specialist knowledge. It’s not just about the loan itself but how it fits into the wider goals of asset protection, succession, and liquidity.
At GSB Private, we guide clients through this process from start to finish. If you or your clients have a Foundation and would like to explore financing options, we are happy to help.
To speak with Nick Jones at GSB Private, please get in touch.
Important considerations
Lending through a foundation structure is not straightforward. It requires a clear understanding of fiduciary duties, asset control, and lender requirements. Working with advisers who understand both the legal and financial aspects of foundation-based lending is essential.
If you or your clients are exploring financing options involving UAE-based foundations, we’re happy to have a conversation.
Get in touch
Contact GSB today if you would like to discuss any of these matters with our in-house team.
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Disclaimer
This article is intended for general information purposes only and does not constitute financial, legal, or tax advice. It is directed at individuals based in the United Kingdom and is not limited to professional clients. No action should be taken based solely on the information provided in this article. Please seek appropriate professional advice before making any decisions.
Risk warning
All investments and lending arrangements carry risk. The value of assets and the terms of borrowing may change, and you may not be able to recover the full amount borrowed or invested.
Regulatory information
GSB Capital Ltd is authorised and regulated by the Dubai Financial Services Authority (DFSA), reference number F006321. GSB Capital Ltd is permitted to provide services only to Professional Clients and Market Counterparties as defined by the DFSA, and this article is not intended to promote financial products to retail clients.