RIYADH: The Middle East is rapidly emerging as a key hub for private equity investments, driven by a global rebound in dealmaking, according to Bain & Co.’s latest Global Private Equity Report.

The report highlights a 37% increase in global buyout investment value, reaching $602 billion in 2024, fueled by declining interest rates, renewed investor confidence, and the urgent need to deploy idle capital.

As Gulf economies accelerate their diversification efforts, government-backed initiatives in technology, renewable energy, and infrastructure are creating attractive opportunities for private equity firms looking to capitalize on the region’s transformation.

Aligning with Global Trends

The surge in Middle Eastern private equity activity reflects broader global trends, particularly the rise of public-to-private transactions, which accounted for $250 billion in 2024—nearly half of all transactions over $5 billion in North America.

Challenges Amid Recovery

While dealmaking has picked up significantly, fundraising remains challenging, as investor caution lingers due to ongoing economic and geopolitical uncertainties.

Exit activity saw a 34% rebound to $468 billion, yet private equity firms still grapple with a backlog of 29,000 unsold companies, limiting distributions to limited partners.

Additionally, rising competition for high-quality deals has sustained high valuation multiples, while higher debt costs have made traditional leveraged buyouts more complex. However, the Middle East remains a standout market, with governments actively supporting private equity investments through Saudi Vision 2030, the UAE’s economic diversification strategy, and Qatar’s long-term economic plans.

Sovereign wealth funds in the region have also emerged as major players, acting as key limited partners and co-investors in both local and global deals.

Key Investment Sectors

Technology remains the dominant sector in private equity globally, accounting for 33% of all buyout deals by value. In the Middle East, investors are focusing on:

• Fintech
• Artificial intelligence
• Digital healthcare
• Sustainable infrastructure

These sectors align with the Gulf’s impact investing and sustainability efforts, as governments drive long-term eco-friendly economic growth.

Outlook for 2025

Bain & Co. predicts that private equity will continue its recovery through 2025, assuming economic stability and favorable trade conditions.

Despite ongoing challenges such as inflation, interest rates, and geopolitical risks, the overall industry sentiment remains one of cautious optimism, according to Hugh MacArthur, chairman of Bain’s Global Private Equity practice.