Middle East Exports More Private Capital Than It Absorbs, but the Gap Is Closing

Investors based in the Middle East still complete far more private equity and venture capital deals outside the region than within it. The margin, however, is shrinking. That is the central finding of BlackRock's Market Evolution: The Middle East report.

In 2021, roughly 560 transactions were struck abroad against 220 at home, a gap of about 340 deals. By 2025 the gap had fallen to around 190, with approximately 360 deals overseas and 170 in the region. Overseas deal counts dropped over that stretch, and domestic counts dropped as well, but the decline abroad was steeper.

BlackRock executives, speaking at a media roundtable in Dubai held to mark the report's release, said they expect capital to keep moving closer to home.

Where the next dollar lands

Ben Powell, chief investment strategist for the Middle East and Asia-Pacific at the BlackRock Investment Institute, framed the shift as a question of destination for the next dollar of allocation. He estimated that US$50 billion to US$100 billion which might once have left the Gulf could instead be retained locally. Gulf economies carry comparatively strong balance sheets, he noted, so nothing forces a rapid change in behaviour. The Gulf will keep exporting capital at scale, in his view, while holding on to more of it — and it is also becoming a destination for global allocators, a process he expects to run over coming quarters and years.

Saudi Arabia's Public Investment Fund has driven much of the reorientation. Its direct private equity dealings inside the Middle East moved ahead of its activity elsewhere in 2023 and have stayed ahead since. The regional share of that direct deal activity rose from about 25% in 2020 to just under 70% in 2025, while the share outside the region dropped from almost 80% to slightly above 30%.

Powell cautioned against treating the Gulf as a single market. The economies differ in the risks and the opportunities they present, he said, and the same holds at sector and individual security level. Investors, he argued, need to be more specific about geographies and about the sectors inside them.

Interest from outside the region is growing, he added, though international investors are still working through the distinctions between Qatar, Oman, Saudi Arabia and the UAE, and between sectors within each of those markets. That leaves room for considerably more global capital to arrive.

Private capital in the region is already concentrated. Of 590 Middle East-based funds closed since 2015, 359 were Saudi and 143 Emirati. The remaining 88 were spread across Qatar, Kuwait, Bahrain, Oman and other markets.

On the UAE, BlackRock points to the country's pull on people and businesses as a source of underlying demand. Powell said the UAE remains somewhere people want to work, live and raise families, and that this feeds real estate demand of a kind few other countries can match.

Sovereign wealth funds tracked by Preqin hold 43% of their exposure in private capital, against 35% for their global peers. Among Middle East limited partners, 83% are positive on or weighing private equity mandates for 2026, up from 70% in 2019.

Family offices in the Gulf that are considering new mandates put private equity at 27%, real estate at 19%, private credit at 16% and infrastructure at 14%.

Powell rejected the idea that domestic and inbound flows compete for the same pool. Investors in the region — individuals, family offices and sovereign funds — are broadening how they allocate, he said, and both trends are running at the same time.