Gulf sovereign funds are deploying capital at a record pace as non-bank finance expands
Gulf sovereign wealth funds committed a record $53.9 billion across 108 deals in the first half of 2026, according to data compiled by Global SWF. The pace points to a regional capital base that is increasingly using channels outside traditional bank lending.
The depth has been building for years. Deloitte reported that global sovereign wealth fund assets reached $12 trillion at the end of 2024 and could reach $18 trillion by 2030. Deloitte also estimated that Gulf funds controlled about 40% of global sovereign wealth fund assets at that time.
These funds generally invest on long horizons and have supported an ecosystem of private lenders, credit funds and specialist financiers. Nearly half of the first-half 2026 sovereign-fund capital went into U.S. deals, according to the Global SWF data reported by Semafor.
A gap the banks left open
The case for non-bank finance in the Gulf partly rests on limited access to conventional credit for smaller companies.
A 2022 Deloitte analysis put SME lending at about 3% of total bank credit in the GCC and estimated the financing gap at roughly $250 billion. The analysis said widening the range of debt and equity instruments could help address different financing needs across the business lifecycle.
Private credit has moved into the space. PwC estimated that the global market grew from about $300 billion in 2010 to $1.6 trillion in 2023. The Financial Stability Board estimated global private credit assets at $1.5 trillion to $2.0 trillion at the end of 2024. Separately, Global SWF data reported by Semafor indicated that the largest Gulf sovereign funds more than quadrupled their private-credit exposure between 2021 and 2025, to about $80 billion.
PwC projects that the private credit market across the GCC and Egypt could expand to between $11 billion and $20 billion within five to six years, depending on credit demand and the regulatory and macroeconomic environment.
Borrowing against what you already own
A decade of company formation has left a growing number of Gulf entrepreneurs and executives holding concentrated equity stakes, in listed firms or in businesses they built. Many have not treated those holdings as a source of liquidity. Financing secured against long-held shares lets an owner borrow against a long-term equity position without selling it. The owner keeps the upside of ownership while raising cash for a new venture, a construction cycle or a bridge to profitability. Interest in the approach has grown as the region’s non-bank capital ecosystem has widened.
The professional infrastructure has also expanded. The Saudi Press Agency reported that around 600 foreign companies had established regional headquarters in Saudi Arabia by March 2025. Riyadh’s growth alongside Dubai has increased the regional pool of advisers, valuation specialists and lawyers available to structure financing transactions.
Startups show the shift in real time. Wamda reported that MENA companies raised $1.7 billion across 242 rounds in the first half of 2026, down 18% from a year earlier. Debt financing accounted for 29% of the capital raised, compared with 44% a year earlier, suggesting that founders continue to use a mix of debt and equity while investors have become more selective.
The discipline test
The global expansion of private credit has not been entirely smooth. Fitch Ratings reported that its U.S. private credit default rate reached 6.0% for the 12 months ended April 2026, the highest level since Fitch began tracking that index in August 2024.
The Financial Stability Board reported about $220 billion of drawn and undrawn bank credit lines to private credit funds across member jurisdictions, while noting that commercial estimates ranged from $270 billion to $500 billion. The FSB also highlighted valuation opacity, layered leverage and limited data. Moody’s estimated that distressed restructurings accounted for approximately 65% of private credit defaults in 2025.
These conditions make underwriting standards, collateral terms and leverage especially important. Loans secured by liquid, listed securities may differ from direct corporate lending, but the liquidity of the collateral does not eliminate borrower risk. Market declines can produce collateral calls or forced sales, and borrowers may face interest-rate, tax, legal and concentration risks. The suitability of any structure depends on the borrower, the collateral, the loan terms and applicable regulation.
The Gulf enters the second half of 2026 with a deep sovereign capital base, a widening set of private lenders and growing use of alternative financing. Traditional banks remain central to the region, while private credit and securities-backed lending are becoming additional channels for certain qualified borrowers.
Disclaimer: This content is for general informational purposes only and should not be considered as financial advice. The content is not intended to be a substitute for professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
