Gulf capital is usually discussed in terms of equity, but the region is also a growing source of credit. Its sovereign funds have built significant lending businesses, family offices hold a larger share of their portfolios in private debt than their peers elsewhere, and Islamic finance offers structures that many conventional lenders cannot. For a Western business, there are several routes to Gulf credit, and each comes with its own expectations.
The pool is deep and the home market shallow. According to Moody's, Gulf sovereign wealth funds manage around US$5 trillion, while the GCC's own private credit market is estimated at roughly US$6 billion. With a home market that small, much of the region's credit appetite is deployed abroad. UBS's Global Family Office Report 2026 found that Middle East family offices held 5% of their strategic asset allocation in private debt in 2025, the highest share of any region surveyed and above the 3% global average. UBS notes that its Middle East sample is small, so the figure is best read as directional.
Growing appetite for private credit in the Gulf does not mean lower standards.
Through private credit funds. The most common route is indirect. Gulf sovereign funds and institutions commit capital to global private credit managers, often through partnerships rather than passive fund stakes. Mubadala agreed a US$1 billion partnership with Fortress Investment Group in April 2025 to deploy capital across private credit and asset-based lending, and its own US$25 billion credit portfolio, built alongside 14 origination partners, opened to third-party investors in July 2026. A Western borrower may therefore be financed by Gulf capital without ever dealing directly with a Gulf institution. Knowing which funds carry Gulf backing can help in choosing which lenders to approach, and in anticipating what those lenders' own investors will expect of them.
Directly from family offices and regional funds. Some family offices lend directly or co-invest alongside credit funds, particularly on asset-backed or property-related transactions where the security is clear. Regional credit funds are also growing, and sovereign investors have supported them for some time: according to Bloomberg, PIF anchored the first close of NBK Capital Partners' US$300 million Shariah-compliant fund, which lends to mid-sized Middle Eastern companies, in 2021. Moody's expects Saudi Arabia to be the main source of borrower demand and the UAE to serve as the structuring and fund-formation hub, supported by dedicated credit fund regimes introduced in the DIFC in 2022 and ADGM in 2023.
Why regional lenders matter to some Western borrowers. Gulf banks remain the dominant lenders and tend to favour large corporates and government-related entities. Saudi official data show that small and medium-sized enterprises received 9.4% of bank lending in 2024, against a Vision 2030 target of 20%. PwC projects private credit in the GCC and Egypt growing by 15 to 30% a year over the next five to six years, although forecasts are not outcomes. For a Western business with a subsidiary, customers or assets in the region, particularly in Saudi Arabia, a regional credit fund may be a realistic lender for that part of the business.
Islamic finance structures. For lenders who follow Shariah principles, interest-bearing loans are excluded, so financing is tied to a real asset or transaction. In a commodity murabaha, the financier buys a commodity or asset at market cost and sells it to the borrower at cost plus a disclosed, fixed profit, paid in instalments, so the return is a trade profit. In an ijara, the financier owns an asset and leases it to the business for agreed rentals, often with a route to ownership at the end. The Islamic Financial Services Board puts global Islamic finance assets at US$4.4 trillion in 2025, up 13.4%, with the GCC holding more than half.
A worked example. Consider a hypothetical London distribution business that needs EUR 10 million to fund stock for a new contract. A conventional lender would offer a term loan with a margin over a reference rate. A Shariah-compliant financier could instead use a commodity murabaha: it buys a commodity for EUR 10 million, sells it to the business at that cost plus a fixed profit agreed at the outset, and the business sells the commodity on to raise cash, repaying the agreed price in instalments. If the same business also needed new vehicles, an ijara might suit better, with the financier owning the vehicles and leasing them to the company. On a spreadsheet the cash flows can look similar to a loan, but the documents, the treatment of late payment and the tax analysis all differ, and each needs specialist advice.
Ticket sizes and fit. Shariah-compliant credit funds give a sense of scale. Janus Henderson's MENA Private Credit Fund IV reached US$191 million at its second close in October 2026, against a US$300 million target, and plans 10 to 12 loans of US$15 million to US$50 million. Principal Asset Management has announced plans for a Shariah-compliant US private credit fund for Gulf family offices and institutions, structured at transaction level. Its head of credit has described access to US private credit as very difficult for Gulf investors with strict Shariah requirements, which is the gap these strategies aim to close and a reason a compliant structure can widen the pool of potential lenders.
What lenders scrutinise. Growing appetite for private credit in the Gulf does not mean lower standards. Moody's notes that for growth to remain credit-positive, managers will need conservative borrowing levels, strong covenant protection and thorough borrower assessment. In practice, a Gulf lender or Gulf-backed fund will look closely at cash flow cover, the quality and enforceability of security, the borrower's record through difficult periods, any concentration of customers or suppliers, and management's reporting discipline. Where a structure is Shariah-compliant, the lender will also confirm that the business avoids prohibited sectors, such as alcohol, gambling or conventional interest-based finance, and that the documentation has been reviewed by a Shariah board or adviser.
The questions lenders ask. Expect to be asked how much debt the business can service from operating cash flow in a weak year, and what would happen to that cover if revenue fell or costs rose. Lenders ask what security is available, where it sits legally and whether anyone ranks ahead. They ask which customers account for the largest share of revenue and how long those contracts run, what covenants the business could comfortably meet, how quickly monthly accounts are produced, and how the facility would be repaid or refinanced at maturity. A borrower that has written down its own answers before the first meeting usually negotiates from a stronger position.
Different lenders, different expectations. A global credit fund with Gulf investors will usually behave like any institutional lender, with familiar documentation and a process run by its own credit team. A regional fund in the DIFC or ADGM will focus on borrowers with a regional connection. A family office lending directly may be more flexible on structure but will often want clear security, a personal relationship with management and time to decide. An Islamic financier will add Shariah review to every stage, which adds time the first time a borrower uses such a structure.
Practical points for borrowers. Cross-border lending raises questions of governing law, withholding tax and security over assets in another jurisdiction, so legal and tax advice should start early. Currency needs attention too. Most GCC currencies are pegged to the US dollar, while a European borrower usually earns in sterling or euros, so hedging costs belong in any comparison of offers. Shariah-compliant structures take longer to document the first time, and retrofitting one late in a process rarely works.
Common mistakes. Borrowers sometimes approach credit providers with an equity-style pitch built around upside, when a lender cares most about the downside and how it gets repaid. Others compare headline pricing without adding hedging, arrangement costs and legal fees, or offer security that is already pledged to an existing lender. Approaching many lenders at once without coordination can also cause problems, since the same opportunity arriving from several directions suggests a business that has struggled to raise elsewhere.
Approaching the right lender. As with equity, relationships carry weight, and a business that arrives with a clear credit case, audited accounts and a sensible proposed structure will be taken more seriously. Wrotham Partners advises Western businesses on debt raises from the Gulf, including how a facility might be structured to suit the lenders most likely to provide it. Terms always depend on the borrower, and no facility is certain until the documents are signed.
This commentary is provided for general information and reflects the views of Wrotham Partners at the time of writing. It does not constitute investment, legal or financial advice.