ADGM Principal Investor License (Not Matched) and ADGM Providing Credit License

Category 2

Principal Capital. Serious Credit. Properly Licensed.

Finjuris advises firms seeking ADGM approval for Principal Investor (Not Matched) and Providing Credit activities - from regulatory strategy to final FSRA authorisation.

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The ADGM Principal Investor License is a powerful regulatory authorisation for firms seeking to deploy their own capital into investments and lending activities within a fully regulated financial environment. Issued by Abu Dhabi Global Market (ADGM) and supervised by the Financial Services Regulatory Authority (FSRA), this licence enables firms to operate as principals in investment and credit transactions while remaining subject to robust prudential oversight.

Structured as an ADGM Category 2 Financial License, the Principal Investor framework is designed for institutions that invest and lend on their own balance sheet, rather than acting as intermediaries, brokers, or deposit-taking entities. Finjuris advises clients across the full lifecycle of principal investment license in ADGM applications - from regulatory structuring to final FSRA authorisation and post-licensing compliance.

A Category 2 Financial Licence from Abu Dhabi Global Market (ADGM) permits the entity with this licence authorisation to perform the role of Principal Investor as well as the role of Credit Provider.

What Is an ADGM Principal Investor License?

An ADGM Principal Investor License authorises a firm to carry out investment dealing as principal (not matched) and providing credit, using its own capital and assuming direct financial risk.

This licence is suited to:

Investment holding companies

Private investment
vehicles

Credit and lending platforms

Family offices and proprietary investment firms

Structured finance and alternative credit providers

pUnlike advisory or matched-principal licences, the Category 2 framework allows firms to take positions directly, earn returns from investment and lending activity, and structure transactions without acting on behalf of third-party clients.

ADGM Category 2 Financial License Explained

The ADGM Category 2 Financial License offers an alternative to the lower-risk advisory licence and the full banking licence. This licence supports significant financial flows while keeping limitations tight enough to safeguard the financial system.

A Category 2 licence enables:

ADGM Investment - Dealing as Principal (Not Matched)

Under this permission, a licensee may:

  • Buy, sell, or hold investments using its own capital
  • Enter into investment transactions directly with counterparties
  • Assume market and credit risk on its own balance sheet

"Not matched" means a firm does not engage in offsetting trades of buying and selling. It only acts as a principal by investing on its own behalf instead of acting on behalf of others.

This activity is commonly used by:
  • Proprietary Trading Firms
  • Private investment companies
  • Alternative investment platforms

ADGM Providing Credit License Activities

The ADGM Providing Credit License authorises firms to:

  • Lend funds to counterparties
  • Structure credit facilities and financing arrangements
  • Engage in private lending and structured credit transactions

This includes a broad range of lending models, subject to FSRA approval and risk assessment. Importantly, while firms may provide credit, they must fund lending activities using their own capital or permitted financing sources, not customer deposits.

For firms exploring a credit provider license in ADGM, Category 2 offers a credible, well-regulated platform for scaling lending operations within the UAE.

However, it specifically excludes deposit taking, which prevents the licensee from taking deposits from the public or opening a bank.

This balance makes Category 2 an attractive option for firms that want flexibility without the added level of regulation associated with deposit-taking institutions.

Minimum Capital Requirements

Category 2 licensees are subject to meaningful capital thresholds reflecting the risk profile of principal investment and lending activity.

Base Capital Requirement: USD 2 Million

Risk-based capital: Minimum Common Equity Tier 1 (CET1): 6% & Tier 1: 8%

The FSRA will assess risk and determine if the licensee requires additional capital beyond the base and tier capital amounts. The FSRA applies a proportional, risk-based assessment and may require additional capital depending on:

1

Transaction size and exposure

2

Counterparty risk

3

Leverage

4

Complexity of investment or credit structures

Capital adequacy must be maintained on an ongoing basis.

Governance

All authorised ADGM firms must appoint or outsource the following roles:

1
Directors (minimum 2)
2
Senior Executive Officer (SEO)
3
Finance Officer (FO)
4
Risk Officer (RO)
5
Money Laundering Reporting Officer (MLRO)
6
Compliance Officer (CO)
These individuals will support the establishment of robust governance, risk management, compliance and AML/CTF processes for each regulated person.

Why Choose ADGM for Principal Investment and Lending?

ADGM has successfully positioned itself as a preferred location for all complex and sophisticated financial works.

Key advantages include

A directly applied common law system providing legal certainty

Independent financial regulation within a global framework

English Language Legislation, Regulation, and Law

A regulator with experience in alternative investments and credit models

Strong reputation abroad and investor confidence

Likewise, in seeking to obtain an ADGM Lending License or Proprietary Investment Platform, ADGM also offers firms flexibility and regulatory legitimacy.

Risk Management and Compliance Frameworks

As the nature of Category 2 activity is represented on the balance sheet, the FSRA requires that effective risk management systems are in place with regard to:

Credit Risk

Market risk

Liquidity Risk

Operational risk

Firms must have clear processes in risk appetite statements, internal controls, escalation mechanisms, and monitoring. Compliance must be in line with the rules established by FSRA. Firms must establish compliance schemes that match the scale of the firm.

Application Process for ADGM Principal Investor License

Step 1: Regulatory Feasibility Assessment

Before submitting an application, firms should assess:
  • Suitability for Category 2 classification
  • Scope of permitted activities
  • Capital adequacy
  • Governance readiness

Finjuris conducts detailed feasibility assessments to ensure regulatory alignment at the outset.

Step 2: Preparation of FSRA Application

The formal application includes:
  • Detailed business plan and financial projections
  • Description of investment and credit strategies.
  • Risk management and compliance manuals
  • AML/CFT
  • Senior management and shareholders profiles

Well-documented procedures are also an important feature in minimizing any regulatory queries.

Step 3: FSRA Review and Engagement

The FSRA undertakes a thorough examination and may:
  • Request clarifications or enhancements
  • Conduct interviews with senior management
  • Evaluate operational readiness

This process is iterative, and also, the regulation necessitates engagement.

Step 4: Licence Grant and Ongoing Supervision

Once approved, the ADGM Principal Investor License is granted. Licensees are subject to ongoing supervision, including:
  • Periodic regulatory reporting
  • Capital adequacy monitoring
  • Compliance reviews
  • Transaction oversight
  • Cost Considerations
While costs vary based on structure and level of complexity, one should budget for:
  • Application and Authorization Fees at FSRA
  • Ongoing Supervision and Regulatory Levies
  • Capital Commitments
  • Legal, Compliance, and Operating Setup Costs

Finjuris aids clients in developing cost projections.

Finjuris offers personalized licensing guidance and assistance to companies seeking ADGM Category 2 Financial Licences.

This is done by providing advisory services relating to regulatory strategy and business plan creation, governance structure development, compliance manual creation and AML frameworks as well as all elements of the FSRA application process to assist clients with gaining approval and ensuring compliance from the beginning.

You will receive assistance from us throughout the entire FSRA application procedure.

The ADGM Principal Investor License offers a compelling regulatory platform for firms deploying capital and providing credit in a sophisticated, well-regulated environment. As an ADGM Category 2 Financial License, it strikes a balance between operational freedom and regulatory discipline, making it ideal for proprietary investors and alternative credit providers.

With Finjuris as your regulatory partner, you gain clarity, credibility, and a structured pathway to FSRA authorisation - from strategy to supervision.

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