Goldman Sachs’ Strategic Expansion into Middle Eastern Private Credit Markets

The Middle Eastern private credit market is undergoing a transformative phase, driven by regulatory reforms, economic diversification, and a surge in demand for non-bank financing. Goldman Sachs, a global leader in alternative investments, has positioned itself at the forefront of this evolution, leveraging executive realignment, tailored fund structures, and strategic partnerships to capitalize on the region’s growing liquidity gap and institutional appetite for risk-adjusted returns.

Market Dynamics: A Booming Landscape

The Gulf Cooperation Council (GCC) and broader Middle East are witnessing a paradigm shift in capital allocation. Traditional banks, constrained by regulatory requirements and risk-averse lending practices, allocate less than 2% of their loans to SMEs, leaving a $200 billion funding gap by 2030 [1]. Meanwhile, sovereign wealth funds (SWFs) like Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi Investment Authority (ADIA), and Mubadala are pivoting toward private credit to diversify their portfolios. Regulatory reforms, including the UAE’s 2023 Private Credit Fund Rules and bankruptcy law updates, have further catalyzed this shift by enhancing transparency and creditor protections [2].

The global private credit market, now exceeding $2 trillion in assets under management (AUM), is projected to reach $30 trillion in the near future, with the Middle East poised to mirror India’s decade-long growth trajectory from under $1 billion to $25 billion in AUM [3]. This expansion is fueled by the region’s 40 free zones, relaxed visa policies, and a growing class of unbanked SMEs seeking flexible financing solutions.

Goldman Sachs’ Strategic Moves

Goldman Sachs has adopted a multifaceted approach to secure its position in this high-growth market.

1. Executive Realignment and Regional Presence
The firm has relocated top private credit executives, including Deb Dutt, to the Gulf to oversee its expanding operations. This move underscores Goldman’s commitment to deepening its on-the-ground expertise and aligning with local market dynamics. The firm has also established offices in Abu Dhabi and secured regulatory licenses in Saudi Arabia, signaling long-term engagement [4].

2. Fund Structures and Investment Focus
Goldman’s Private Credit Fund is structured to prioritize income distribution, capital preservation, and capital appreciation, with a focus on SMEs and infrastructure projects. The fund’s strategy aligns with the region’s need for non-bank financing, particularly in sectors like real estate and energy, where private credit offers higher yields compared to traditional banking [5].

3. Partnerships with Sovereign Wealth Funds
Goldman has forged high-profile collaborations with regional SWFs. A $1 billion joint venture with Mubadala targets private credit opportunities in the Asia-Pacific, while a preliminary agreement with PIF aims to launch funds focused on private credit and public equity in the Gulf. These partnerships leverage PIF’s long-term economic goals under Vision 2030 and Goldman’s global expertise in risk-adjusted returns [6].

Navigating Risks: Regulatory and Market Challenges

Despite the optimism, Goldman faces significant risks. Regulatory complexity, such as the UAE’s 2020 Securing Rights over Movable Assets law, increases operational burdens for private credit funds [7]. Geopolitical tensions, including conflicts in the region and global trade uncertainties, also pose threats to liquidity and creditworthiness. Additionally, the concentration of private credit in SMEs—many of which lack robust financial structures—heightens default risks.

Goldman’s mitigation strategies include:
- Diversified Portfolio Construction: Focusing on senior and junior loans across sectors to balance risk and return.
- Local Partnerships: Collaborating with entities like PIF to navigate regulatory landscapes and access deal flow.
- Global Expertise: Leveraging its Capital Solutions Group to integrate risk management, origination, and structuring under a unified framework [8].

Investor Implications and Outlook

For investors, Goldman’s expansion into the Middle East offers exposure to a market with strong growth potential but requires careful risk assessment. The firm’s partnerships with SWFs and focus on SMEs align with broader trends of economic diversification and infrastructure development. However, the illiquid nature of private credit and geopolitical volatility necessitate a long-term, patient capital approach.

As the Middle East’s private credit market matures, Goldman Sachs’ strategic realignment and institutional relationships position it to capture a significant share of the $30 trillion global opportunity. Yet, success will depend on its ability to adapt to regulatory shifts and macroeconomic headwinds while maintaining disciplined risk management.

Source:
[1] The surge of private credit in the Middle East, [https://www.deloitte.com/middle-east/en/our-thinking/mepov-magazine/frontiers/the-surge-of-private-credit-in-the-middle-east.html]
[2] The Evolving Face of Finance: Private Credit's Role in the Middle East, [https://www.kslaw.com/news-and-insights/the-evolving-face-of-finance-private-credits-role-in-the-middle-east-market-recap-and-2025-outlook]
[3] Private Credit: The Middle East's Next Financial Frontier, [https://sclowy.com/news/private-credit-the-middle-easts-next-financial-frontier/]
[4] Goldman Shifts a Top Private Credit Executive in Bet on ... [https://www.bloomberg.com/news/articles/2025-09-05/goldman-shifts-a-top-private-credit-executive-in-bet-on-mideast]
[5] Goldman Sachs Private Credit Fund LLC, [https://www.sec.gov/Archives/edgar/data/1920145/000119312523077970/d410243d1012g.htm]
[6] PIF and Goldman Sachs Asset Management Forge Strategic Partnership to Boost Investment in Saudi Arabia and the GCC, [https://serrarigroup.com/pif-and-goldman-sachs-asset-management-forge-strategic-partnership-to-boost-investment-in-saudi-arabia-and-the-gcc/]
[7] The Evolving Face of Finance: Private Credit's Role in the Middle East, [https://www.kslaw.com/news-and-insights/the-evolving-face-of-finance-private-credits-role-in-the-middle-east-market-recap-and-2025-outlook]
[8] Goldman Sachs Asset Management’s 2025 Outlook, [https://www.scribd.com/document/802139724/Goldman-Sachs-Asset-Management-s-2025-Outlook-1732214014]