Global fund managers are using Cayman Islands structures to tap demand from investors in the Middle East and North Africa.
The approach is being driven in part by investors seeking funds that meet Sharia requirements while giving managers access to capital from the region, according to a roundtable discussion from Maples Group and Morgan Lewis.
The Middle East and North Africa region has become a focus for international managers as they seek new sources of capital. The Gulf Cooperation Council economies in particular have a growing entrepreneurial sector, financial centres such as ADGM and DIFC and institutional investors including sovereign wealth funds.
For many investors in the region, however, access to capital comes with specific requirements. One recurring consideration is whether an investment fund can be structured to comply with Sharia principles.
The Islamic finance industry grew by 10.2% in 2025 compared with 2024, according to an S&P Global report published in May 2026. Cayman Islands-domiciled vehicles are among the structures being used to give investors flexibility while meeting Islamic investment requirements.
The Islamic asset management industry has expanded its deployment of Sharia-compliant capital across alternative asset classes over the past five years.
Global managers have also become more familiar with how Islamic funds and investment vehicles are structured and approved, helping them pursue capital from Islamic investors.
The pool of Islamic capital is believed to exceed US$3.5 trillion. But accessing it can require managers to comply with restrictions on leverage and other financial ratios while maintaining strategies that have already established a track record.
Investor requirements can also differ. A structure accepted by one Islamic institutional investor may not be acceptable to another, while managers can have different levels of appetite for establishing and administering Sharia-compliant vehicles.
That can bring additional parties into the process, including Sharia advisors, commodity brokers, administrators and trustees. Legal and operational considerations can also extend to murabaha cost-plus financing and wakala agency arrangements.
Credit strategies have become another area of activity. The market has moved from earlier products focused on listed equities and fixed income towards Sharia-compliant equivalents of profit-participating financing structures used in leveraged buyout and real estate strategies.
As interest rates increased, demand also grew for credit funds and equivalent products. The firms expect a mix of credit funds and increased deployment into leveraged buyout and real estate strategies during the remainder of 2026.
Islamic investors are also establishing their own Cayman-domiciled investment structures. Where investors retain responsibility for a master structure and obtain approval from their Sharia advisors, global managers can have a single entry point for deploying capital.
Other investors expect managers to establish and operate the structures themselves. This can take longer and requires managers to understand the relevant vehicles, stakeholders and documentation.
Newer areas include securitisation strategies and staking arrangements involving digital currencies. Private placements involving AI and data centre companies and private sukuk offerings are also gaining traction in Saudi Arabia, the UAE and international markets.
The firms expect Sharia-compliant funds to become more integrated into global capital markets. They said lower leverage and Sharia-based structures are supporting demand from long-term institutional investors including sovereign wealth funds in the GCC region.
