Gulf Private Credit Market Sees Significant Growth Amid Regional Diversification Efforts
The private credit market in the Gulf is experiencing accelerated growth, evolving from primarily a capital source to a key global market. This expansion is fueled by ambitious economic diversification strategies across GCC governments, which aim to support local small and medium-sized enterprises (SMEs) and reduce reliance on oil. A substantial credit gap of approximately $250 billion for SMEs, often overlooked by traditional banks, is attracting international private credit firms.
The Gulf region's private credit market is undergoing rapid development, driven by a combination of structural factors and proactive government policies. While still emerging compared to global counterparts, its growth trajectory is accelerating, positioning the region as an increasingly important market for private credit.
Governments across the GCC are actively pursuing ambitious economic diversification strategies. Notable initiatives include Saudi Arabia’s Vision 2030, UAE 2031, and the Dubai Economic Agenda (D33), all of which emphasize increased privatization and support for the expansion of local small and medium-sized enterprises (SMEs). GCC banks typically prioritize lending to large corporations and government-related entities, resulting in SMEs accounting for less than 10% of total bank lending. This disparity has created an estimated credit gap of approximately $250 billion, which global private credit firms are now aiming to address.
Partners for Growth (PFG), a firm headquartered in San Francisco with an office in Dubai, is a key player in this evolving landscape. Specializing in custom debt solutions for high-growth companies, PFG entered the Gulf market in 2020. Since then, the firm has deployed about $450 million in commitments, primarily across Saudi Arabia and the UAE. PFG has supported several prominent technology companies in the region, including Saudi fintech unicorn Tabby, TruKKer, Bayzat, Syarah, Huspy, and Silkhaus. PFG provided $10 million in funding to Tabby after its seed round and remains a lender to the company.
Armineh Baghoomian, managing director of Partners for Growth, stated that PFG focuses on lending to emerging tech and innovation companies, many of which have limited financial history or profitability, areas often avoided by traditional banks. The firm's expertise includes providing highly structured facilities for asset-heavy businesses, with most of its regional deals being sharia-compliant. This adherence to sharia principles is often favored by entrepreneurs and investors in the region. PFG has forged partnerships with entities such as Dubai International Financial Centre (DIFC), Saudi Venture Capital, Sukna Capital, and Jada, an investment vehicle established by Saudi Arabia's Public Investment Fund (PIF).
The broader trend of international institutional capital entering the region is evident. In April, the Public Investment Fund (PIF) announced its intention to anchor a new private credit fund, to be managed by King Street Capital Management. This fund will supply capital to corporates and facilitate asset-based lending throughout the region. King Street Capital Management, a global alternative asset manager overseeing $30 billion in assets, has been expanding its regional presence. Brian Higgins, founder and managing partner of King Street, projects that the regional private credit market will need to grow by at least 15-30% annually over the next five years to adequately finance economic development in Saudi Arabia and the MENA region.
According to Fortune, the Gulf is recognized for national agendas that drive economic diversification from centralized revenue sources, fostering strong innovation ecosystems.
