Gulf Cooperation Council (GCC) Member Countries Attract Billions in Capital Investment

Countries within the Gulf Cooperation Council (GCC) have recently become sought-after destinations for capital investment from around the globe.

This growing trend is driven by the GCC member countries' quest to explore domestic investment opportunities beyond their traditional reliance on hydrocarbons for economic growth.

A report from Preqin, a prominent data tracking firm, has shed light on this remarkable shift in capital flow. According to the report, the total private capital assets under management (AUM) in GCC member countries soared to a substantial $12.3 billion in 2022.

To put this in perspective, it was a mere $1 billion in December 2008.

Saudi Arabia and UAE Lead GCC Member Countries in Investment

Among the GCC nations, Saudi Arabia emerged as the frontrunner in this surge, with a significant AUM of $10 billion, closely followed by the United Arab Emirates (UAE) with AUM amounting to $2.1 billion.

This remarkable report highlighted a notable change in investor sentiment towards the GCC region.

It revealed that venture capital funds have become a magnet for capital, with the total capital ready for deployment experiencing a fourfold increase, skyrocketing from $400 million in December 2021 to a staggering $1.63 billion by the end of 2022.

Prominent international investors like Blackstone, CVC Capital Partners, Silver Lake, and Apollo have actively contributed to this influx of capital through various deals.

The report also underscored the growth in the number of active general partners within GCC member countries.

The count has nearly doubled from 268 in 2018 to an impressive 529 as of the latest report.

In the context of private equity funds, general partners play a pivotal role in managing the fund and selecting investments for their portfolios.

Between 2018 and 2023, the GCC region witnessed the successful raising of a total of $6.5 billion through 142 different funds, as revealed in the report.

This amount includes the closure of 23 venture capital funds, collectively raising around $2.5 billion, along with 81 real estate funds that raised $2.3 billion between September 2021 and September 2023.

Additionally, 38 private equity funds closed between 2018 and 2020, securing a total of $1.7 billion in capital.

The report also offered insights into the impressive cumulative assets under management (AUM) of Middle East-based sovereign wealth funds, which exceeded $3.7 trillion as of March 2023.

Furthermore, Preqin's data highlighted the growing allocation of assets to alternative investments such as private equity and venture capital in the GCC region.

In December 2022, these alternatives constituted 44 percent of AUM, a substantial increase from the 22 percent recorded in December 2021.

This demonstrates a clear shift in investment strategies within the GCC countries, aligning with the global trend towards alternative assets.

Gavin Gibbon / AGBI