A sad end to the Forsyth Saga

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Each week Arabian Business turns the spotlight on a leading company.

Oh dear. Who's died?

No-one, don't worry. Forsyth Partners is an asset management company that currently has over US$1.8bn in funds and managed accounts, and deals worth US$2bn in advisory contracts. It also bills itself as the first foreign asset management company to have relocated its headquarters to the Dubai International Financial Center (DIFC).

I heard that Forsyth just lost its licence...

That's correct. Of the 460 registered companies in the DIFC, Forsyth can accurately bill itself as the first firm to be kicked out of Dubai.

So where did it all go wrong?

As can be imagined, the regulator and the company have been tightlipped about the whole affair. Here's what we do know: Two weeks ago, the Dubai Financial Services Authority (DFSA) ordered Forsyth to stop all activity that might "prejudice the clients or creditors of the firm". Then, on Sunday, the DFSA said that Forsyth had "failed to meet the applicable regulatory capital requirements and was unable to demonstrate a capacity to remedy that breach". In normal speak, Forsyth has allegedly run out of cash.

It can't be a shortage of capital. I thought they had US$4bn under their belt?

I'm not sure if that number is accurate - as a private company, its books are not open. Forsyth simply released a statement announcing that it had agreed to withdraw its financial services licence, and thanked the DFSA for its "assistance during this restructuring process".

So Forsyth wasn't kicked out, it was "restructuring its operation"?

Even if we are to accept that Forsyth's European operations are in great shape and on the verge of explosive growth, it is extremely unusual for an asset management company to go about "restructuring" by having its head office's financial licence revoked. It is also the first time that Forsyth made any mention of leaving Dubai.

So you don't believe the "restructuring" argument?

The company said it has been evaluating operations since the beginning of the year, but never announced anything that signaled such a radical shift. Forsyth had been busy launching new private equity and Islamic finance products in May, and the CEO recently said that the company was "very comfortable" in its choice of Dubai.

I remember that Forsyth had some dealings with the embattled Shuaa Capital a while ago. Is this a continuation of that fallout?

It is true that Shuaa Capital and Forsyth Partners partnered to launch an Asian fund that never materialised, but both companies deny that the failure was due to the Shuaa controversy. Either way, Forsyth - you will be missed.

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