PE funds continue to stay upbeat on UAE despite West Asia conflict

Synopsis

Private equity firms are investing in the UAE despite Middle East tensions. Blackstone committed $250 million to a new payments platform. Nahda Capital Partners and Gaw Capital Partners launched new Gulf-focused funds. These firms see long-term opportunities in the UAE and GCC. Investments focus on resilient sectors and tech-enabled companies.

Dubai: Despite escalating geopolitical tensions across the Middle East, private equity (PE) activity in the UAE continued with Blackstone committing $250 million to a newly established Abu Dhabi-based payments infra platform on Thursday. The investment follows at least two new PE fund launches in the country during the current conflict. Nahda Capital Partners and Hong Kong-based Gaw Capital Partners unveiled their new Gulf-focused vehicles after the Iran-Israel war began.

The US private equity giant Blackstone announced the quarter-billion-dollar investment in Advanced Digital Gaming Technology (ADGT), a newly established payments and data intelligence technology platform through a strategic partnership with Abu Dhabi-based investment company Raya Holding, and technology partners NRT Technology, and Sightline Payments. The platform aims to support regulated digital markets globally.

"We see significant opportunity to deploy capital at scale in the UAE to build companies that can grow both domestically and internationally, despite near term headwinds," said Jon Gray, president and COO of Blackstone said on Thursday. The company plans to initially focus on deployments across the UAE, the Middle East, Africa, and select international corridors.

Though the deployment activity in the PE and venture capital space has come down substantially since the regional conflict broke out on February 28, new fund launches continue amid confidence in the long term "structural resilience" in the country and the wider Gulf Cooperation Council (GCC).

Structural resilience seen driving new PE investments in the region and wider GCC

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Nahda Capital Partners launched its inaugural PE vehicle, Nahda GCC Fund I in Abu Dhabi's international financial centre ADGM earlier this month. The fund aims to raise $300 million to build its control-oriented mid-market PE strategy focused primarily on the UAE, Saudi Arabia and wider GCC.

"The launch has been planned for a long time...These are difficult days and the priority is safety and de-escalation. At the same time, we see the current situation as a severe but temporary shock rather than a change in the long-term trajectory of the UAE and the wider GCC," the PE firm's founder and managing partner Inigo de Luna told ET.

As it prepared to commence fundraising, Luna said that there was strong interest among limited partners. "In volatile periods, serious LPs become even more focused on fundamentals-team experience, governance, alignment, sourcing, and the ability to execute a control-oriented value creation strategy. We believe we score very well on those points," he said, adding that the core team has raised multiple funds in Europe.

Hong Kong-headquartered Gaw Capital Partners, which manages $34.4 billion in assets, launched a GCC-focused growth equity vehicle last week with target size of $400 million. The Gaw Tamkeen Nexus Fund has already reached a first close, securing $150 million in commitments so far, while the firm establishes a presence in Abu Dhabi and Riyadh.

Andrei Rotaru, the managing partner and head of Middle East at the firm, said the long-term structural opportunity in the GCC remains very strong, even as the near-term environment may remain volatile.

"We are focusing on sectors and business models that are more resilient through cycles, particularly those that are asset light, with strong cash flow visibility, essential service characteristics, or structural demand drivers," he said.

The fund is an extension of its growth equity strategy and aims to invest in high-growth tech-enabled companies in the UAE, Oman, Qatar, and Saudi Arabia. Key focus areas include fintech, AI, digital infra, and climate-tech, among others.

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