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Gulf Wealth Drives Private Credit Market Growth and Strategic Partnerships

Private credit market at $1.7 trillion thrives with Gulf wealth, drawing top firms to Middle East for billion-dollar deals.

By Max Weldon

5/16, 12:30 EDT
Apollo Global Management, Inc.
Ares Management Corporation
Barclays PLC
Blackstone Inc.
Goldman Sachs Group, Inc.
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Key Takeaway

  • Gulf sovereign wealth funds and family offices are significantly fueling the $1.7 trillion private credit market, with firms like Apollo and Blue Owl intensifying Middle East visits.
  • Strategic partnerships, such as Mubadala with Ares Management and ADIA's tie-up with Barclays, highlight the Gulf's growing influence in private lending.
  • High-profile deals, including Blackstone's $900 million loan to Depot Connect and Goldman Sachs raising $3.6 billion for a real estate credit fund, showcase the sector's dynamism.

Gulf Wealth Fuels Private Credit Growth

The private credit market, now valued at $1.7 trillion, has seen a significant influx of capital from Gulf sovereign wealth funds and family offices, driven by the allure of returns that have outperformed both private equity and public credit sectors. This interest has led to a notable increase in the frequency of visits by top executives from firms such as Apollo Global Management Inc., Blue Owl Capital Inc., Sixth Street Partners, and hedge fund Mudrick Capital Management to the Middle East. These visits, often coinciding with major events like NBA preseason games, underscore the strategic importance of Gulf investors to the private credit industry. The region's investors have become pivotal, with the ability to contribute over $1 billion to single funds, highlighting the scale of potential investments from the Gulf.

Strategic Partnerships and Expansions

The engagement between Gulf investors and private credit firms has led to the formation of significant partnerships and expansions within the region. Notable collaborations include Mubadala Investment Co.’s partnerships with Ares Management Corp. and the Abu Dhabi Investment Authority’s commitment to a private credit tie-up with Barclays Plc and AGL Credit Management. These alliances are part of a broader strategy to not only attract capital to the region but also to foster a local network of private lenders. The establishment of offices by firms like Monroe Capital in Abu Dhabi and the expansion of Blue Owl and Hayfin Capital Management indicate a deepening commitment to the Gulf market.

High-Profile Deals and Fundraising Efforts

The private credit market has been characterized by a series of high-profile deals and fundraising efforts, reflecting the sector's dynamic nature and the significant role of Gulf investors. For instance, Blackstone Inc. and Goldman Sachs Asset Management have played major roles in providing a substantial portion of a $900 million direct loan to Depot Connect International. Additionally, private credit firm Kadita Partners has successfully raised over $100 million for its maiden investment fund, and Goldman Sachs Group Inc.’s alternatives business has garnered $3.6 billion for its latest real estate credit fund. These activities underscore the vibrancy of the private credit market and the critical role of Gulf capital in fueling its growth.

Street Views

  • Mohamed Mughal, CEO of First Forte Consultancy (Bullish on private credit):

    "Interest in private credit has exploded in the last two, three years and that’s because the credit markets are giving equity-like returns. We’ve never seen that before."

  • Chiradeep Deb, global head of investment banking at Mashreq Bank (Bullish on Gulf region's interest in public and private debt markets):

    "Investors and banks from the Gulf region remain liquid and are eager to diversify both in the public and private debt markets... We feel we have a role to play in this."