Private capital financing in the Gulf Cooperation Council (GCC) region has experienced a significant surge, reaching $54.8 billion between 2020 and 2024, up from $10.4 billion in the previous five years, according to S&P Global.
This growth is attributed to companies seeking alternatives to traditional bank funding, with private financiers expanding their reach to more mature and established companies. In December 2024, 79% of private financings were directed towards established firms, a substantial increase from 31% in 2015.
The trend reflects a global shift, positioning the Middle East as a key area for private capital growth in 2025. Government initiatives and sector reforms are driving this development, with venture capital funding in Saudi Arabia increasing nearly 15 times between 2018 and 2023, reaching approximately $6.1 billion.
Despite a decline in private capital transactions to $14.5 billion in 2024 from a peak of $20.4 billion in 2023, the number of transactions in 2024 was still 2.7 times higher than in 2015, indicating strong underlying fundamentals.
While private capital is becoming an important funding source, bond issuances remain the preferred method, accounting for 51% of the total amount raised in 2024, followed by bank financing at 26%. Private capital financings constituted 3% of the funding mix.
The increase in private capital financing is expected to continue, driven by companies underserved by banks and the flexibility offered by private financings in terms of execution speed, terms, and competitive pricing. This growth is further supported by the diversification efforts of regional sovereign wealth funds and the inclusion of local markets in global indices, attracting both regional and international investors.
Overall, the GCC's private capital landscape is evolving, providing alternative funding sources for companies and contributing to the region's economic diversification and growth.
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