The United Arab Emirates (UAE) is rapidly emerging as a pivotal hub for private credit investment, with global financial powerhouses establishing a significant presence in the region. This strategic move is set to catalyze the growth of private credit markets across the Gulf Cooperation Council (GCC) countries, marking a transformative phase in the region’s financial landscape.
In recent months, several leading asset managers and financial institutions have inaugurated offices and launched initiatives in the UAE, signaling a robust commitment to the Middle East’s burgeoning private credit sector. Notably, Nuveen, managing assets worth over a trillion dollars, opened its first Middle East office in Abu Dhabi in 2024. This move aligns with Abu Dhabi’s strategic goal to diversify its economy by attracting financial services firms.
Similarly, Investcorp, a Bahrain-based investment manager with billions in assets under management, recently secured significant funding through a note sale to provide distributions from its private credit fund. This innovative approach underscores the firm’s strategy of leveraging fund-level securitization to provide immediate returns to investors, reflecting a growing trend among private-equity firms to explore alternative distribution methods without asset liquidation.
Strategic Partnerships Fueling Growth
The UAE’s appeal as a private credit hub is further bolstered by strategic partnerships between local and international financial entities. In early 2024, Goldman Sachs and Mubadala Investment Company announced a billion-dollar partnership to co-invest in private credit opportunities across the Asia Pacific region. This collaboration leverages Goldman Sachs’ extensive credit investment expertise and Mubadala’s strategic vision, aiming to deploy long-term capital to high-quality companies and sponsors throughout Asia Pacific, with a particular focus on India.
Additionally, Citigroup Inc. and Apollo Global Management Inc. unveiled a multi-billion-dollar alliance to provide private loans to businesses, primarily in North America, with potential future expansions. This program also involves capital from Mubadala Investment Co. and Athene, Apollo’s insurance annuity business, highlighting the UAE’s integral role in global private credit markets.
Regulatory Initiatives Supporting Expansion
Recognizing the potential of private credit, Abu Dhabi Global Market (ADGM) has proposed a private credit fund framework to enable ADGM-based funds and their managers to originate and invest in private credit. This initiative aims to capitalize on the global private credit market’s growth and attract asset managers focusing on this fast-growing asset class. The framework is designed to provide appropriate safeguards while fostering innovation and reducing barriers to entry for fund managers.
With strong regulatory backing and a clear commitment from financial institutions, the UAE is establishing itself as the premier destination for private credit in the region. These developments indicate a long-term shift in the region’s financial markets, positioning the UAE as a leader in private credit deployment.
GCC: The Next Frontier for Private Credit
The UAE’s advancements in private credit are setting a precedent for the broader GCC region. Industry analysts estimate that the private credit market in the GCC is currently valued at billions of dollars, with substantial growth anticipated in the coming years. The region’s ambitious economic development plans, such as Saudi Arabia’s Vision 2030, are expected to open new opportunities for alternative investments, with private credit poised to benefit significantly.
Large-scale projects in Saudi Arabia and the UAE are projected to require deeper capital markets, offering substantial opportunities for investors through debt, equity, private capital, and other alternative instruments. Infrastructure projects, energy transition initiatives, and SME financing are among the key areas where private credit is expected to play a vital role.
Ruya Partners, the Gulf’s first partner-owned private credit provider, exemplifies this growth trajectory. Founded to address the financing gap for small and medium-sized enterprises (SMEs) in the region, Ruya Partners aims to raise hundreds of millions of dollars from investors. The firm targets companies with a minimum annual EBITDA of several million dollars, primarily in Saudi Arabia and the UAE, providing growth capital and supporting economic diversification efforts.
Future Outlook
The establishment of private credit giants in the UAE and the supportive regulatory environment are paving the way for the next evolution of private credit deployment across the GCC. As regional economies continue to diversify and seek alternative financing solutions, private credit is poised to play a pivotal role in funding SMEs, infrastructure projects, and strategic initiatives. The collaborative efforts between local entities and global financial institutions underscore a shared vision of economic growth and resilience, positioning the GCC as a burgeoning hub for private credit investment.
As the UAE strengthens its role as a regional financial hub, other GCC countries are likely to follow suit, fostering deeper capital markets and encouraging alternative investments. The increasing presence of international financial institutions in the region is not only enhancing the availability of private credit but also shaping the financial landscape for long-term sustainable growth.
This transformation represents a significant milestone in the GCC’s economic evolution, making the region an attractive destination for investors looking to tap into new markets with strong growth potential. As private credit giants continue to take root in the UAE, their expansion into the broader GCC will mark the next stage of financial innovation and investment in the Middle East.
