Private markets draw more Middle East capital as companies stay private

Dubai: Private markets are taking a larger share of investor attention, with more capital moving into assets outside traditional stock and bond markets. A growing number of companies are choosing to remain private for longer, which is changing where and how value is created.

That change is shaping how investors build portfolios. Public markets continue to offer liquidity and transparency, but private markets are opening access to earlier stages of business growth and a wider range of sectors.

The contrast is clear in how investors participate. Listed markets allow quick entry and exit, backed by regular pricing and disclosure. Private markets operate on longer timelines, with limited liquidity.

"Public markets offer liquidity and transparency, whereas private markets provide long-term capital, control, and return potential," said Tajinder Virk, Co-founder and Group CEO of Finvasia.

Public vs private markets

“Public markets… provide investors with access to companies and assets that have chosen to list their securities for public trading, offering liquidity and price transparency in return for regulatory disclosure and market scrutiny,” said Xavier Rémond, Senior Executive Officer at Arboris Capital Limited.

He contrasted this with private markets, which involve investing in companies and assets outside exchanges, typically through funds or direct deals by institutional investors.

Private investments often require capital to be locked in for years. Exit options can be limited. In return, investors gain exposure to assets unavailable on public exchanges.

“A significant and growing share of economic value today is generated by private companies, well before — and often without — any public listing,” Rémond said.

Shift in where value is created

In the US, about 87% of companies with revenues above $100 million are privately held, underlining the scale of this shift.

Private market assets under management have crossed $13 trillion globally, supported by sovereign funds, pension funds and large family offices.

"Private markets are moving from being an alternative allocation to a core component of global portfolios," Virk said.

Investors are drawn by diversification, return expectations and access to sectors that are harder to reach through listed markets. Private assets can also show lower correlation with public markets, making them useful in portfolio construction.

Middle East momentum

In the Middle East, participation in private markets has expanded steadily. Sovereign wealth funds and large family offices are active across global transactions, often deploying capital at scale.

“Institutional appetite for private markets has been durable and continues to develop,” Rémond said, pointing to regional investors as some of the most active globally.

Recent deals reflect this trend, with regional players involved in major international transactions and building partnerships across private credit, infrastructure and private equity.

"The ecosystem is smaller than the US or Europe, but more agile, with faster decision-making and increasing participation from global fund managers," Virk said.

Saudi, UAE drive activity

Saudi Arabia and the UAE continue to account for a large share of activity, supported by diversification programmes and strong liquidity. Together, they have represented most private equity deal activity in the region in recent years.

Several segments are gaining momentum. Private credit has expanded quickly, driven by demand for flexible financing and reduced lending by traditional banks.

Global fundraising in private credit reached about $224 billion in 2025, reflecting sustained demand for direct lending and specialty finance strategies.

The segment now spans a wide range of strategies, including asset-backed lending and infrastructure-related financing.

Credit and infrastructure growth

Infrastructure investment is also expanding, driven by demand for energy projects, transport networks and digital systems such as data centres. Global fundraising approached $300 billion in 2025.

Private equity and venture capital remain active, especially in technology and innovation-focused sectors, though investors are becoming more selective.

Private markets play a growing role alongside banks and public markets in funding businesses and long-term projects.

“Private markets serve as an important complement to banks and public capital markets in financing economic activity,” Rémond said.

Filling financing gaps

They are increasingly filling gaps where bank lending has tightened, whether due to regulation, capital constraints or shifting risk appetite.

They support companies at different stages, from early development to expansion, and help finance large-scale infrastructure.

"Private capital supports businesses before they are ready for public markets, enabling innovation, job creation, and economic expansion," Virk said.

Flexible deal structures allow investors to tailor financing to specific projects or borrowers.

Risks and trade-offs

Longer investment horizons allow capital to align more closely with the duration of underlying assets, particularly in infrastructure and real estate.

Private market investments require careful evaluation. Limited liquidity means capital is tied up for longer periods, and valuation practices can vary across funds.

“Private market investments typically involve longer lock-up periods, less liquidity, and more limited exit options,” Rémond said, noting that reporting standards can also be less uniform.

Access remains restricted in many cases, with participation largely limited to institutional and professional investors.

Evolving role in portfolios

As the market grows, attention is shifting toward governance, reporting and ways to improve liquidity without changing the long-term nature of the asset class.

Private markets are becoming more central to how capital is allocated, both globally and in the Middle East.

In the region, strong capital availability and ongoing investment programmes are supporting this trend, with private markets playing a larger role in financing growth across sectors.

The balance between public and private markets continues to evolve, with each serving a distinct role in the investment landscape.