DIFC credit fund

The DIFC credit fund regime allows a fund domiciled in Dubai’s financial free zone to originate loans itself. Its conditions are set out in the DFSA’s Collective Investment Rules. The fund takes the form of an Exempt Fund or a Qualified Investor Fund open only to Professional Clients. The DFSA authorises its manager, whereas other DIFC funds accept managers established outside the zone. The fund is closed-ended and its term is limited to ten years. Its borrowing stays below 10% of its net asset value. No later than three years after its launch, its exposure to any single person or group is brought below 25% of its net assets. It invests at least 90% of its assets in credit to claim this asset class. Loans to individuals, to parties related to the manager, to financial institutions and to borrowers that on-lend the funds are prohibited, as are letters of credit and financial guarantees. On 7 July 2026, the DFSA published Consultation Paper 173. It proposes to remove the 90% threshold and several lending prohibitions, including those covering financial institutions and cross-border trade finance. The prohibition on lending to a borrower that on-lends the funds remains in the draft. For a European company, these rules set the maximum ticket a fund grants it and the maturity compatible with the fund’s remaining life.

A DIFC credit fund has €400m of net assets and was launched four years ago. It is reviewing a €90m senior loan to a French food group, or 22.5% of its net assets, below the 25% cap. The fund has six years of life left: the loan is set at five years so that it is repaid before the fund’s liquidation.

• The ticket sought, compared with the cap of 25% of the fund’s net assets on any single group
• The fund’s remaining life, at most ten years after its launch, against the loan maturity
• The DFSA authorisation of the manager
• The rules adopted following Consultation Paper 173