GCC Private Credit Market Set for Rapid Growth as Bank Lending Tightens

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Private credit emerges as a key growth driver for GCC mid-market firms as bank lending tightens.

The GCC and Egypt private credit market reached approximately $5 billion in 2024 and is projected to grow at 15-30 percent annually, reaching $11-20 billion by around 2030.
Local banks could tighten lending criteria by up to 20 percent for mid-market firms and SMEs, creating a structural funding gap that non-bank lenders are moving to fill.
ADGM launched a dedicated Private Credit Fund regime in 2023, providing a regulated framework for non-bank lenders to originate and manage credit facilities in the UAE.
ADIA and Mubadala had invested more than $10 billion globally in private credit by end-FY23, with Mubadala's private credit portfolio alone reaching roughly $20 billion by early 2025.
Abu Dhabi is positioning itself as the Gulf's private credit capital, attracting international managers such as Monroe Capital while home-grown firms like Ruya Partners begin originating regional deals.
Private credit offers mid-market firms faster execution and flexible covenants, but typically requires higher financial reporting standards and more intensive lender oversight than bank loans.

ADGM and DIFC Provide the Regulatory Backbone for Direct Lending Growth

The Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) have established themselves as the primary regulatory anchors for the GCC's expanding non-bank lending sector. Both free zones operate under English-law-based frameworks and have introduced specific regimes to facilitate private credit funds and direct lending, giving international and regional managers a clear legal foundation for originating credit facilities across the UAE.

The growth of GCC mid-market corporate financing through private credit aligns closely with broader economic agendas - including Abu Dhabi Economic Vision 2030 and the UAE's "We the UAE 2031" strategy - which prioritise the development of sophisticated, diversified financial ecosystems. For corporate borrowers and institutional investors alike, the UAE's maturing regulatory environment is expanding the range of viable financing options well beyond traditional bank credit.

A Market Set to More Than Double by 2030

The GCC and Egypt private credit market stood at roughly $5 billion in 2024, according to a PwC analysis. Forecasts project compound annual growth of 15-30 percent over the next five to six years, pointing to a potential market size of $11-20 billion by around 2030. This trajectory mirrors the global pattern, where private credit expanded from approximately $300 billion in 2010 to around $1.6 trillion by 2023.

PwC's base-case scenario applies a blended annual growth rate of around 14.9 percent, benchmarked against US, European, and Asia-Pacific private credit markets. Under this scenario, GCC private credit could more than double in size by the end of the decade. Further upside is possible if adoption follows the faster trajectory seen in markets such as India, where the asset class has grown rapidly in a short period.

Tightening Bank Credit Opens the Door

Tightening bank lending standards are the primary catalyst for private credit's growing appeal. Regional analyses indicate that local banks could tighten lending criteria by up to 20 percent, particularly affecting mid-sized corporates, SMEs, and asset-light sectors such as technology. In some GCC markets, banks already operate at relatively high loan-to-deposit ratios, limiting their capacity to grow balance-sheet lending at historic rates.

Traditional lenders continue to favour large government-related entities and top-tier family conglomerates, while many mid-market borrowers face higher collateral requirements, longer approval timelines, and more conservative underwriting. In several GCC countries, SME lending remains well below policy aspirations as a share of total bank portfolios - highlighting the structural funding gap that private credit firms are moving to fill. Private credit's ability to offer bespoke facilities, tailored to growth businesses rather than asset-heavy incumbents, makes it a natural fit for this unmet demand.

Regulatory Reforms Drive Market Confidence

In 2023, the Financial Services Regulatory Authority (FSRA) within ADGM launched a dedicated Private Credit Fund regime. This allows ADGM-domiciled funds to originate and invest in credit facilities, subject to diversification, leverage, borrower-eligibility, and governance standards. Parallel UAE reforms to insolvency and secured-lending laws have since strengthened creditor rights and improved enforcement prospects - a critical prerequisite for non-bank lenders to scale confidently.

Legal practitioners, including those at King and Spalding, note that the combination of ADGM's fund regime, improved insolvency rules, and clearer security frameworks has opened the door to more private credit entrants in a market previously dominated by banks. Saudi Arabia has also introduced regulatory regimes permitting asset managers to establish private credit funds and direct lending platforms, contributing to a broader regional market build-out.

Sovereign Capital and Abu Dhabi's Ambitions

Abu Dhabi is actively positioning itself as the Gulf's private credit capital, according to Institutional Investor. The emirate's strategy rests on three pillars: building partnerships between sovereign funds and global alternative managers, strengthening ADGM's legal and regulatory framework, and attracting international managers to establish a physical presence locally.

Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company are among the largest global backers of private credit strategies, having collectively invested more than $10 billion in the asset class globally by end-FY23. Mubadala's private credit portfolio alone reached roughly $20 billion by early 2025. International managers including Monroe Capital have opened ADGM-registered offices, while home-grown direct lender Ruya Partners arranged a $15 million facility for digital freight platform TruKKer in July 2025 - its sixth investment from its flagship fund.

What This Means for Mid-Market Borrowers

For mid-market firms, private credit - which encompasses direct loans, mezzanine finance (a hybrid of debt and equity ranking behind senior debt), venture debt, and structured capital - offers faster execution and covenant packages designed around growth businesses rather than asset-heavy balance sheets. These advantages are most pronounced in technology, fintech, logistics, and digital platforms, where companies often lack the real-estate collateral or long track records that banks demand.

However, private credit comes with trade-offs, including higher borrowing costs than senior bank debt. Lenders also require enhanced financial reporting, cash-sweep mechanisms, and operational covenants that provide close visibility into borrower performance. As Deloitte notes, the asset class is still evolving in the GCC. Nevertheless, regulatory maturity, rising sovereign capital deployment, and structural bank-lending constraints all support forecasts of mid-teens annual growth in the region's private credit market through the end of the decade.

What Clients are Asking their Advisors

What is private credit and how does it differ from a bank loan?

Private credit refers to debt financing provided by non-bank lenders - such as specialist funds and alternative finance firms - rather than traditional banks. Unlike bank loans, private credit facilities are bespoke, negotiated directly between lender and borrower, and can include tailored covenant packages and flexible repayment structures. Borrowers generally pay a premium for this flexibility compared with standard bank rates.

How does a UAE mid-market company access private credit funding?

UAE mid-market firms can approach private credit managers registered with ADGM or DIFC, which operate under English-law frameworks with dedicated fund regimes for direct lending. The process typically involves direct negotiation with the lender rather than a public bond issuance or standard loan application, and can move faster than bank credit processes. Companies in high-growth or asset-light sectors - such as technology, logistics, and fintech - are among the most active users of these facilities.

How does the GCC private credit market compare to global markets?

The GCC private credit market is still nascent compared with North America and Europe, where the asset class has grown to over $1.6 trillion globally. However, the region's projected annual growth rate of 15-30 percent is expected to outpace mature markets, driven by structural gaps in bank lending and ambitious economic diversification agendas. Gulf sovereign wealth funds, which have historically deployed private credit capital abroad, are increasingly pushing for a greater share of deals to be originated within the region.

What are the main risks or downsides of private credit for GCC borrowers?

Private credit facilities typically carry higher borrowing costs than senior bank debt, reflecting the additional flexibility and risk they involve. Borrowers also face more intensive reporting and governance obligations, including operational covenants and cash-sweep mechanisms that give lenders close visibility into business performance. For smaller firms, the administrative burden of maintaining these obligations can be significant, and the lender relationship tends to be more hands-on than with a traditional bank.