RIYADH: The Middle East is rapidly emerging as a prime destination for private equity investment, spurred by a global resurgence in dealmaking, according to Bain & Co.’s latest Global Private Equity report.
The report highlights a 37 percent rise in global buyout investment value, reaching $602 billion in 2024, fueled by declining interest rates, renewed investor confidence, and the growing need to deploy idle capital.
As economic diversification accelerates across the Gulf, government-backed initiatives are driving investments in technology, renewable energy, and infrastructure, positioning private equity firms to capitalize on these shifting dynamics.
“The Middle East is entering a dynamic period of growth and transformation, creating unprecedented opportunities for investors,” said Gregory Garnier, head of Bain & Co.’s private equity practice in the region.
He emphasized that success in this market will depend on leveraging local expertise, forming strategic partnerships, and adopting innovative value-creation models.
This rise in Middle Eastern activity mirrors broader global trends. Public-to-private transactions, for example, are leading the private equity market, accounting for $250 billion in 2024—representing nearly half of transactions over $5 billion in North America.
Global challenges persist
Despite a strong recovery in dealmaking, fundraising remains difficult, with investor caution driven by ongoing economic and geopolitical uncertainties.
While exit activity rebounded by 34 percent to $468 billion, private equity firms still face a backlog of 29,000 unsold companies, limiting distributions to limited partners.
Rising competition for high-quality deals has kept valuation multiples elevated, and increasing debt costs are complicating traditional leveraged buyouts. However, the Middle East stands out as a key market, with governments actively supporting private equity investments through initiatives like Saudi Vision 2030, the UAE’s economic diversification strategy, and Qatar’s long-term plans.
Sovereign wealth funds in the region have also become major players, acting as key limited partners and co-investors in both local and global deals.
Rising sectors and investment focus
Technology continues to dominate private equity globally, accounting for 33 percent of all buyout deals by value. In the Middle East, key areas of focus for investors include fintech, artificial intelligence, digital healthcare, and sustainable infrastructure projects. These sectors align with a growing trend toward impact investing and sustainability, driven by government efforts to foster long-term, eco-friendly economic growth in the Gulf.
Looking ahead, Bain & Co. forecasts that private equity will continue its recovery through 2025, assuming stable economic policies and trade conditions.
Hugh MacArthur, chairman of Bain’s Global Private Equity practice, noted that despite ongoing challenges such as inflation, interest rates, and geopolitical risks, the overall sentiment in the industry remains one of cautious optimism.
Source: www.arabnews.com
