Middle Eastern sovereign wealth funds boost regional M&A

M&A activity within the Gulf Cooperation Council (GCC, which comprises Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, and Oman) defied the global trend in 2025 as both deal value and deal transaction count to December 1 were higher than the totals for 2024 (USD72.7 billion over 554 transactions, up 170% and 2.6% respectively).

The UAE (USD60.4bn) and Saudi Arabia (USD8bn) were the two biggest markets, with both recording higher deal value in Q4 2025 compared with the previous quarter.

Some of the biggest transactions were inbound acquisitions in the energy and infrastructure sectors, including Aramco’s USD11bn lease and leaseback of its Jafurah gas processing business to a consortium of investors led by Global Infrastructure Partners. The region’s financial services sector has also seen number of in-market mergers, including Gulf Bank and Warba Bank (Kuwait), and other ongoing transactions across countries in the GCC.

Outbound M&A follows national objectives

Outbound M&A activity was high, with Middle Eastern sovereign wealth funds among the world’s most active cross-border investors. Their deals are driven by national governments’ desire to transition their economies away from fossil fuels, execute their policy objectives (for example by using acquisitions to scale domestic or regional champions, or consolidate companies in strategic sectors); strengthen ties with international allies; boost their soft power; and/or invest in the industries of the future.

SWFs pursue control positions

As their influence grows, SWFs are taking more control positions over minority stakes or passive investments. We are also seeing a marked uptick in international private equity and private credit funds investing in the region. These transactions often have a dual purpose, with the largest private capital firms increasingly looking to the Middle East for capital including anchor investments from SWFs.

The highest-profile SWF transaction of 2025 was the Saudi Public Investment Fund’s (PIF) USD55bn acquisition of videogame developer Electronic Arts alongside Silver Lake and Affinity Partners, the investment company founded by Jared Kushner, President Trump’s son-in-law.

U.S. policy shifts and access to technology

Since entering office, the Trump administration has sought to partner with governments in the region on a range of initiatives, from real estate projects to M&A transactions.

These deals have given Middle Eastern governments access to U.S. technologies such as AI and semiconductors in exchange for investments into “America First” priority sectors including data centers, energy, and manufacturing. Recent sales of advanced U.S. chips to the Middle East are the result of a significant policy shift in Washington. The U.S government has rescinded the Biden government’s AI Diffusion Rule, under which licensing requirements were imposed on technology transactions with a broad swathe of countries.

In November Saudi Prime Minister Mohammed bin Salman (MBS) visited the White House, where President Trump agreed to sell F35 fighter jets and tanks to the kingdom. MBS also pledged an additional USD400bn of investment into American technology and infrastructure, on top of the USD600bn promised earlier in the year. The two leaders also signed a nuclear energy partnership, critical minerals framework, and AI memorandum of understanding. In May, President Trump signed similar deals with the UAE and Qatar. 

Governments use strategic neutrality as technological hedge

While relations with the U.S. have grown closer under President Trump, Middle Eastern governments are also leveraging their strategic neutrality to pursue M&A opportunities in the PRC (including through co-investments between regional SWFs and Asia-Pacific asset managers).

China has been building relationships across the Middle East for many years, and as early as 2020 had replaced the European Union as the GCC’s largest trading partner. China’s investments into the region span infrastructure (through its Belt and Road initiative and financial cooperation arrangements), while its Digital Silk Road program—as well as its national champions—have led the charge in the tech space. 

Elsewhere, investment flows with India and Africa are strong, especially in sectors such as energy and minerals. India in particular has close social ties with the region thanks to the significant movement of human capital across the Arabian Sea.

Domestic and regional opportunities in focus

Middle Eastern SWFs are also investing heavily in digital infrastructure and AI capacity closer to home through state-affiliated investment vehicles such as Saudi Arabia’s Humain (backed by PIF), and MGX, the UAE’s dedicated AI fund. Humain, launched in May 2025 as a national champion for the Saudi Arabian tech sector, plans to build up to 6GW in data center capability across the country by 2034, working with partners including Nvidia, AMD, Qualcomm, and Cisco. In November, it announced a USD3bn domestic data center deal with Blackstone.

The emergence of regional venture capital aims to cultivate early-stage companies that will eventually deliver new services, create jobs, and further support government diversification plans.

Saudi Arabia is home to Aramco Ventures and Neom Investment Fund, while Qatar has signaled plans to invest more than USD1bn in local VCs. The UAE for its part backs accelerator initiatives such as Dubai’s DIFC Innovation Hub and Abu Dhabi’s Hub71.

IPO markets perform strongly

Middle Eastern IPO markets have continued to perform well over the past 12 months. In Q3 2025 there were 11 listings in the region, which raised USD1.21 trillion. 

Eight of those were on Saudi Arabia’s Tadawul Stock Exchange, raising USD637m. Looking ahead we expect another strong year in 2026 driven by a steady flow of exits by the Saudi Public Investment Fund (PIF), scaled private companies coming to market and further flotations of family-owned businesses.