Middle East Perspectives: A broader toolkit for private equity and private credit deals

As private equity and private credit activity expands across the Middle East, investors are using a broader financing and structuring toolkit to navigate an increasingly active but selective deal market.

What we're seeing in dealmaking

The Middle East entered 2026 as one of the more active deal markets globally, with PwC reporting a 33 percent increase in inbound and intra-regional transactions in 2025 compared to 2024, as investors prioritized conviction over volume. Inbound infrastructure investment has been a driver of that activity, and our work on some of the region's largest inbound infrastructure deals has provided a firsthand view of that momentum.

Sponsors and corporates are increasingly turning to flexible private-market structures, with private equity (PE) and alternative credit working together in new ways. Execution planning is also becoming increasingly shaped by geopolitical and compliance considerations—typically, not reducing activity, but making diligence, documentation and closing mechanics more deliberate.

Private equity is rising, but more selective and exit-aware

PE deal count rose 21 percent in 2025, with capital concentrating on healthcare, digital infrastructure and industrial technology, and sponsors building platforms with credible exit paths from the outset. Exit data is encouraging: Middle East PE exit value reached US$3.02 billion in the first quarter of 2026, compared to US$590 million during the same period in 2025. But windows remain uneven across sectors, so financing and exit strategy need to be designed together—focusing early on refinancing paths, covenant headroom and intercreditor clarity, so the capital stack supports more than one plausible exit route. We are also seeing deeper upfront diligence and more precise risk allocation in documents, rather than reliance on late-stage conditions precedent.

Private credit moves from optional to execution-critical

Private credit in the GCC and Egypt remains small relative to the US and Europe, but growth is clear: the regional market is estimated at US$3 to US$4 billion today, with projected annual growth of 15 to 30 percent over the next five years. The manager base is deepening toward specialized strategies, including distressed opportunities, reinforced by regional governments' more bankable, creditor-friendly insolvency regimes—a factor often as important to lenders as pricing or tenor.
Globally, Moody's expects private credit AUM to exceed US$2 trillion in 2026, with a shift toward asset-backed finance and increased use of NAV lending, PIK instruments and evergreen vehicles. Private credit is no longer just a substitute for bank lending—it is a modular solution built around speed, tenor, security and governance, so terms (covenants, security scope, information rights, consent matters, leakage controls and remedies) are increasingly where value is protected or lost. Where geopolitical factors are relevant, processes are increasingly compliance-led, with early attention to sanctions screening and payment routing.

The regulatory and structuring toolkit is expanding

The infrastructure supporting private capital is maturing. In Saudi Arabia, the Capital Market Authority's 2025 Instructions on Direct Financing Investment Funds are already being operationalized. For example, Sukna Capital received approval for what is described as the first open-ended, Sharia-compliant direct financing fund in KSA. In the UAE, Abu Dhabi Global Market's (ADGM) Numou platform connects SMEs with lenders, and the Dubai International Financial Centre's (DIFC) Variable Capital Company Regulations (February 2026) broaden structuring options. Together, these developments expand practical options for managers and sponsors and signal a market readying itself for greater flexibility and growth.

What this means for clients

The opportunity for clients lies in combining PE value creation with flexible credit to fund growth, manage execution risk and unlock liquidity. Structure matters as much as pricing—covenants, security, information rights and governance are where outcomes diverge quickly, not negotiating afterthoughts. Platform selection also has real consequences: ADGM and DIFC offer different tools and frameworks, and the onshore/offshore choice should reflect the activity, investor base and regulatory requirements. Capital structure and exit strategy should be designed together. Where compliance considerations arise, sanctions/exposure mapping should be treated as a critical-path diligence workstream reflected in tailored drafting.

Key takeaways

• Consider a two-track financing process (bank and private credit) early on time-sensitive deals to protect execution certainty and negotiating leverage.
• Underwriting structure should be scrutinized as carefully as pricing—bespoke private credit terms matter significantly at exit.
• Choosing the right vehicle and platform matters. Regulatory frameworks across ADGM, DIFC and onshore Saudi Arabia are evolving quickly, and the right choice is transaction-specific.
• Build exit readiness into the capital stack from day one—the improving but uneven exit environment rewards early preparation by all key stakeholders and advisors.
• Plan for deeper compliance diligence and more tailored drafting (sanctions representations, covenants and conditions precedents) to preserve closing certainty.

Looking ahead

The fundamentals supporting private capital growth in the Middle East are intact: active sovereign and institutional capital, improving regulatory infrastructure, and genuine demand from mid-market companies needing more than a bank facility. Clients who treat PE and private credit as one integrated strategy, rather than separate conversations, are likely to be better positioned as deal activity builds—supported by earlier diligence, clearer risk allocation, and capital stacks designed to stay flexible across multiple exit outcomes.

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