Still modest in size, the regional private credit market is growing fast, boosted by sovereign capital and regional and global direct lenders.
Private credit—nonbank lending to business—is a long-established practice in the US and Europe. Globally, the market has exploded from approximately $300 million in 2010 to a projected $2.8 trillion by 2028.
In the Gulf Region, the private credit market is still in its early stages. Yet a combination of structural forces is accelerating its growth.
“The GCC [Gulf Cooperation Council] essentially offers investors emerging-market growth opportunities with quality fundamentals that outrank advanced economies,” says Dino Kronfol, head of Global Sukuk and MENA Fixed Income at Franklin Templeton. “Efforts to further diversify economies and mobilize domestic and foreign investment will create enormous opportunities in financial services.” Franklin Templeton was one of the first global leaders in asset management to open an office in Dubai, in 2004.
Governments across the GCC are implementing ambitious diversification strategies to reduce their reliance on oil and gas revenues. A pillar of these strategies is private-sector activity, and the expansion of small to midsized enterprises (SMEs) in particular.
But access to funds is a challenge. Local banks focus primarily on large infrastructure and state-backed projects while regulatory capital requirements limit their appetite for riskier lending. Capital markets also remain relatively underdeveloped. As a result, SMEs account for less than 10% of total lending in the GCC, compared to roughly 20% in developed countries. The lending gap is more than $250 billion, and private credit is increasingly viewed as one way to close that gap.
The growth of the GCC private credit market is ultimately supported by sovereign capital, global credit managers seeking new opportunities, and a growing group of regional direct lenders focused on mid-market companies. Future growth will depend on demand from corporates, but also on economic conditions—and security—in the Gulf.
“Recently, times have been challenging, with the Strait of Hormuz blockage, oil at $100 a barrel, and hostilities continuing,” says Mirza Beg, partner and co-CIO at Ruya Partners, a private credit fund manager headquartered in the Abu Dhabi Global Market (ADGM). “But we don’t expect the longer-term story of regional private credit growth to derail because of that.”
Global Slowdown To Regional Opportunity
The sector truly began gaining traction as fundraising conditions worsened in Western markets. Following the Covid-19 pandemic, higher interest rates and rising capital costs disrupted the traditional private-equity cycle of invest, exit, distribute, and redeploy, leaving many investors struggling to raise new funds.
“Obviously, they started showing up a lot in this region,” Beg observes. “This coincided with allocators here, especially the sovereigns, starting to change their mindsets and basically saying to everyone: We’ve been exporting capital for so long. You guys have made a lot of money using it. Now we want this capital to be invested to help develop our countries as well.”
Backed predominantly by sovereign and sovereign-linked funds in the United Arab Emirates and Saudi Arabia, Ruya Partners’ fund strategy focuses on investing in mid-market companies, so far deploying roughly half of its capital in the UAE and half in Saudi Arabia.
An ecosystem has begun to take shape. According to a recent PwC study, private credit in the Gulf and Egypt could grow at a compound rate of 15% to 30%, reaching between $11 billion and $20 billion by 2030.
“Recently, times have been challenging … But we don’t expect the longer-term story of regional private credit growth to derail.”
Mirza Beg, Ruya Partners
“Activity picked up about five years ago, with approximately $5 billion underwritten over that time frame,” Kronfol notes. “While encouraging and witnessing rapid growth, the amounts pale in comparison to public bonds, sukuks, and syndicated loans issuance, which exceeded $315 billion in 2025.”
A Growing Cast Of Players
So far, deal flow remains relatively modest, but it is increasing. Some of the larger transactions have involved real estate projects or fintech platforms like Tamara in Saudi Arabia and CredibleX in the UAE. Most deals, however, are smaller—typically under $50 million—and target midmarket companies in sectors like retail, healthcare, logistics, and transportation.
Global asset managers are moving quickly to establish a presence in the region’s key hubs. Abu Dhabi has attracted US firms, including Apollo Global Management, Blackstone, and Davidson Kempner Capital Management while Dubai hosts such players as Oaktree, Ares Management, and Blue Owl. Other entrants include UK’s Janus Henderson Investors and Hong Kong-based SC Lowy.
Many of these firms focus primarily on raising capital and keeping a close relationship with sovereign wealth funds (SWFs) rather than funding local deals, which are often too small for their mandate.
Mid-market lending is therefore largely the domain of regional managers. Firms including Ruya Partners, Shuaa Capital, Jadwa Investment, and Amwal Capital Partners are setting up regional funds, typically between $100 million and $250 million in size. Latest in line: Saudibased Jadwa Investment’s $200 million private credit fund, launched in January. Last May, Amwal Investment, an alternative investment firm based in Dubai and Riyadh, started a $150 million Shariacompliant private credit fund targeting 10 to 15 deals annually, with a focus on technology-enabled platforms.
Another defining feature of the Gulf private credit market is the strong role of SWFs: some of the largest in the world. Over the past decade, GCC sovereign funds have been investing in private credit globally, through partnerships with asset managers or by setting up their own structures. In the UAE, Mubadala has reportedly committed over $20 million to private credit strategies worldwide. The Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund are also increasing their exposure.
Family offices are starting to follow as they look to diversify their holdings and earn a nice yield. But allocations remain small, typically around 2% of portfolios.
Another difference is that while developed markets in Europe and the US tend to be sponsor-led, typically financing leveraged buyouts orchestrated by private equity firms, in the Middle East, the market is more focused on direct lending to companies seeking growth capital.
“The biggest difference is the absence of a dynamic private equity industry that sponsors transactions, placing a heavier burden on private credit managers to originate deals,” Kronfol notes.
A Gulf private credit investor “has to do a lot of the work that the private equity sponsors would do in the developed markets,” says Ruya Partners’ Beg, “which means it generally takes longer to get deals closed. But at the same time, you can drive deal terms better. In the developed markets, it ends up being a lot more commoditized, a lot more competition.”
Although still nascent and focused on senior lending and subordinated capital, including mezzanine debt and capital appreciation vehicles, the Gulf private credit market is becoming increasingly sophisticated, “transitioning toward more specialized and targeted product offerings such as special situations and distressed debt,” the PwC study notes.
Another distinctive feature is the role of Islamic finance. Sharia-compliant structures are becoming an important niche within private credit, and international managers are increasingly exploring the opportunity. In November, Janus Henderson launched a Sharia-compliant private credit strategy targeting the region.
Regulation Fuels Growth
Regulation also plays a critical role in supporting the sector’s development. Most private credit investment firms operating in the Gulf are based in offshore financial centers like the ADGM or the Dubai International Financial Center (DIFC), where the legal system is modeled on English common law.
The number of asset managers licensed in Dubai increased 35% between 2020 and 2023, DIFC data shows, with private credit strategies accounting for a substantial share of this growth. Both the DIFC and ADGM introduced dedicated regulatory frameworks for private credit funds— in 2022 and 2023, respectively—aiming to attract more international players and support the growth of the asset class.
“We structure all of our financing arrangements within the offshore financial centers, but what’s really interesting is that the onshore regime is also moving toward Western legal regimes,” Beg observes, citing the evolution of local laws on such matters as floating charges or bankruptcy.
Despite the growth of private credit, banks remain dominant lenders in the region. Many GCC banks currently view private credit firms as rivals and are moving to launch their own offerings. Over time, however, the more likely scenario is that—as was the case with fintech—banks will find it more advantageous to collaborate rather than compete.