21 July 2026
The Middle East's most promising growth sectors were built on a decade of abundant capital. What comes next?
Globally, private credit has become one of the fastest-growing corners of finance – and an essential source of funding for growing businesses. Non-bank capital filled a gap created by the retreat of banks after the 2008 financial crisis and the asset class hasn’t looked back since: assets grew from roughly $375 billion to over $1.6 trillion by 2023, as institutional investors stepped up to lend to businesses that were capital starved but fundamentally sound.[1]
Non-bank capital can also play a critical role in the next chapter of the Gulf’s growth journey.
The region's growth sectors — renewable energy, tourism, fintech, climate tech, AI infrastructure, gaming and professional services — were built on a decade of abundant funding. Many of these businesses remain robust despite the disruption of the Iran conflict, which the UN estimates could cost almost $200 billion in total losses.[2]
Investors have been quick to return. Funding for start-ups has already rebounded to $454.7 million in May after a substantial drop in March.[3],[4] Two-thirds of May funding rounds involved debt financing. It’s a sign that growing businesses have more tools at their disposal.
The rebound in startup funding is part of a broader trend, with non-bank capital becoming increasingly important across the region. Investors want structures that protect their downside, while businesses need funding that moves fast and doesn’t involve giving up ownership or taking a hit to their equity. It's an environment built for private credit.
Strong sovereign partnerships
Gulf sovereign wealth funds have helped seed an alternative capital ecosystem.
The Gulf’s largest sovereign wealth funds more than quadrupled their private credit exposure between 2021 and 2025 — to $80 billion.[5] PwC forecasts the private credit market in the Gulf and Egypt could grow 15-30% annually to reach $11-20 billion by 2030.[6]
And they are ready to backstop with more capital. The governor of Saudi Arabia's Public Investment Fund described the Kingdom's fiscal position as "strong, stable and resilient" at Miami's Future Investment Initiative in March.[7] Gulf states have also continued to borrow cheaply and easily — a UAE bond issue in March was heavily oversubscribed.[8] Sovereign capital remains a deep, patient pool.
That growth of private credit can fill a gap that predates the war. GCC banks allocate less than 2% of lending to SMEs — among the lowest rates globally — leaving a credit gap Deloitte estimates at roughly $250 billion.[9]
Banks may gravitate toward government-backed contracts and established businesses where it’s much easier to underwrite loans. Founders and executives in fast-growing business verticals may not fit that mold and have to deal with more paperwork. Private credit — including equity-linked financing against long-term shareholdings — can be underwritten and deployed on a timeline banks and public markets rarely match.
Dubai and Riyadh’s rise as professional-services hubs has accelerated the growth of an alternative capital ecosystem. Riyadh has already attracted more than 700 international companies by the end of 2025, ahead of a 2030 target.[10] The two cities have a dense ecosystem of consultants, advisers and valuation specialists that can facilitate access to sophisticated financial tools.
Private credit can help firms bridge funding gaps, retain talent and position themselves for recovery – whether they are waiting for tourists to return after the summer months, managing multi-year construction contracts or scaling towards profitability.
In many cases, it involves existing assets.
The rapid wave of company formation in the Gulf over the past decade means a growing number of entrepreneurs and executives now hold significant equity stakes — in listed companies or their own firms — that many haven't thought to treat as collateral for loans. Equity-backed financing, which lets shareholders borrow against long-term holdings of shares or equity funds without sacrificing the benefits of long-term ownership, is gaining traction as a result.
For the Gulf's growth story to continue, business leaders will need a wide range of financing tools at their disposal. The rise of non-bank capital can be a source of strength for the region – and for its growing businesses.
[1] https://finpolicy.georgetown.edu/articles/the-explosive-growth-of-private-credit-2/
[2] https://www.bloomberg.com/news/articles/2026-03-31/arab-nations-may-lose-200-billion-from-iran-war-un-study-finds
[3] https://www.wamda.com/2026/04/mena-startup-funding-drops-48-3-million-march-2026
[4] https://www.wamda.com/2026/06/mena-startups-raise-4547-million-2026-led-debt-financing
[5] https://www.semafor.com/article/04/09/2026/gulf-sovereigns-quadruple-private-credit-portfolios
[6] https://www.pwc.com/m1/en/publications/seizing-the-moment-growth-prospects-for-private-credit-in-the-gcc-and-egypt.html
[7] https://www.thenationalnews.com/news/us/2026/03/26/saudi-arabias-fii-kicks-off-as-iran-war-overshadows-global-investment-outlook/
[8] https://mof.gov.ae/en/news/uae-treasury-bonds-auction-held-in-line-with-march-schedule-with-a-total-issuance-of-aed-1-1-billion/
[9] https://www.deloitte.com/middle-east/en/services/consulting/perspectives/bridging-sme-gcc-finance-gap.html
[10] https://www.rcrc.gov.sa/en/projects/saudi-program-to-attract-the-regional-headquarters-of-international-companies-rhq-2/
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