MENA Sovereign Wealth Funds Investment Strategy 2024-2025: Key Insights from EY Report

MENA Sovereign Wealth Fund Landscape and AUM Growth

The Middle East and North Africa region has cemented its position as the undisputed epicenter of sovereign wealth. According to EY’s comprehensive 2024-2025 report on MENA sovereign wealth fund investment strategy, assets under management across 28 MENA-based sovereign wealth funds reached an extraordinary US$5.4 trillion by December 2024. This milestone represents a staggering 59% increase since 2020, when MENA SWF assets stood at approximately US$3.4 trillion, underscoring the region’s accelerating financial influence on global markets.

The growth trajectory has been remarkably consistent. From US$2.8 trillion in 2018, MENA SWF AUM has expanded through each successive year — US$3.0 trillion in 2019, US$4.1 trillion in 2021, and US$4.4 trillion in 2023 — before surging to the current US$5.4 trillion level. The 22% year-over-year growth recorded in 2024 marks the highest annual expansion rate since 2021, driven by elevated hydrocarbon revenues, favorable global equity markets, and increasingly sophisticated investment strategies that extend well beyond traditional energy sector plays.

What makes this accumulation particularly significant is the concentration relative to economic output. MENA sovereign-owned assets now represent more than 1.4 times the region’s GDP — a ratio that dwarfs every other geography on earth. By comparison, North America’s sovereign assets amount to just 0.01 times GDP, while Europe and Asia each stand at approximately 0.1 times GDP. This extraordinary density of state-controlled capital gives MENA governments an unparalleled tool for shaping their economic futures, funding diversification programs, and securing influence across global industries. For investors seeking to understand how institutional capital is reshaping markets, resources like the Deloitte wealth management trends analysis provide complementary perspectives on this shift.

Global SWF Market Context and MENA Dominance

To appreciate the scale of MENA’s sovereign wealth dominance, it helps to examine the broader global context. Worldwide, sovereign wealth fund assets reached approximately US$13 trillion in 2024, posting an 11% year-over-year gain. The global SWF market has expanded from US$7.4 trillion in 2018 at a compound annual growth rate that EY projects will carry total AUM to US$18 trillion by 2030 — a 6% CAGR over the forecast period. MENA funds alone are projected to reach US$8.1 trillion by 2030, growing at an even faster 7% CAGR.

MENA’s 28 sovereign wealth funds represent over 40% of all global SWF assets despite being home to a fraction of the world’s funds by count. Asia, with 33 funds, manages US$4.4 trillion. Europe’s 25 funds hold US$2.3 trillion. The remaining regions — Oceania (US$470 billion), North America (US$377 billion), Sub-Saharan Africa (US$74 billion), and Latin America (US$42 billion) — collectively hold less than a fifth of what MENA commands alone. The sheer scale of capital concentration means that MENA SWF allocation decisions ripple across asset classes globally, from venture capital rounds in Silicon Valley to infrastructure concessions in Southeast Asia.

The operating environment heading into 2025 has improved notably compared to recent years. The global election super-cycle has largely concluded, providing greater political visibility. Inflationary pressures have stabilized across major economies, and central banks in the GCC have begun signaling rate reductions — the UAE’s policy rate is forecast to decline from 5.2% to 4.3%, while Saudi Arabia’s is expected to drop from 5.3% to 4.5%. These conditions create a more favorable backdrop for sovereign wealth fund deployment, with EY noting that private markets confidence has been building across the sector. According to the IMF’s Regional Economic Outlook for the Middle East, GDP growth in the MENA region is projected to increase to 3.3% in 2025 and 4% in 2026.

GCC Economic Diversification and Non-Oil GDP

Behind the aggressive investment posture of MENA sovereign wealth funds lies a structural imperative: economic diversification away from hydrocarbons. The GCC nations have made substantial progress on this front, with non-oil GDP now contributing approximately 70% of total GDP in 2024 — up from 67% in 2022. EY projects this ratio will continue climbing, reaching 71% by 2029 as national transformation programs such as Saudi Arabia’s Vision 2030, the UAE’s diversification strategy, and Qatar’s National Vision 2030 continue to channel sovereign capital into non-traditional sectors.

The urgency of diversification becomes apparent when examining fiscal breakeven oil prices. Saudi Arabia’s breakeven price stands at US$90.9 per barrel in 2025, while Bahrain faces an even steeper threshold of US$124.9 per barrel. Only Qatar (US$44.7) and Oman (US$57.3) maintain breakeven levels comfortably below current market prices. These fiscal realities compel SWFs to generate returns that can supplement — and eventually replace — hydrocarbon revenues as a primary funding source for government spending and social programs.

Average real GDP growth across the GCC is forecast at 3.7% annually through 2028, outpacing the 2.7% global average and significantly exceeding the 2.0% projected for advanced economies. This economic momentum provides SWFs with a dual advantage: rising domestic investment opportunities in rapidly growing sectors like tourism, financial services, and technology, combined with the financial muscle to pursue ambitious cross-border acquisitions. The World Bank’s MENA economic overview corroborates these growth trajectories, noting that structural reforms are beginning to yield measurable diversification gains.

MENA SWF Direct Investment Activity in 2024

MENA sovereign wealth funds deployed capital with renewed vigor in 2024, completing approximately US$165 billion in direct investments across 53 deals outside the region. This represents a dramatic rebound from the US$71.7 billion invested in 2023, and approaches the US$144.2 billion record set during the post-pandemic surge of 2022. On a global scale, SWF deal sizes expanded by roughly 63% year-over-year to US$221 billion, with MENA funds accounting for approximately 75% of the total — a commanding share that underscores the region’s outsized role in shaping deal flow.

The scale of individual transactions has grown significantly. The year’s standout deal saw a MENA sovereign wealth fund complete a US$12.4 billion acquisition of a US-based insurance brokerage — the largest insurance sector transaction of 2024. This mega-deal exemplifies the strategic shift among MENA funds from passive portfolio investments toward control transactions that provide operational influence and direct exposure to high-growth sectors in developed economies.

Domestically, MENA SWFs have also increased their home-market investment activity. Between 2018 and 2023, the number of within-MENA deals rose from just 2 to 8, reflecting growing confidence in local opportunities across sectors such as fintech, real estate, healthcare, and logistics. This dual-track approach — combining aggressive global deal-making with strategic domestic deployment — allows SWFs to fulfill their mandate of both generating financial returns and supporting national economic development objectives. For more on how institutional investors are navigating these dynamics, explore the McKinsey Global Private Markets Review analysis.

Sector Allocation Strategies Across MENA Funds

The sector composition of MENA SWF investments in 2024 reveals a clear strategic orientation toward technology-enabled financial and digital infrastructure. Financial services dominated with a 26% share of total deal value, followed by digital infrastructure at 20% and technology at 18%. Healthcare and business services each captured 9%, while real estate, hospitality, and construction accounted for 7%. This allocation profile closely mirrors — but exceeds — global SWF sector preferences, where financial services and digital infrastructure each claimed 23% of the US$221 billion total.

The prominence of digital infrastructure is particularly notable. Within the broader infrastructure category, digital assets — data centers, fiber networks, cloud infrastructure, and telecommunications towers — accounted for 84% of MENA SWF infrastructure deal value and a staggering 93% globally. This concentration reflects the convergence of two powerful trends: the exponential growth in compute demand driven by artificial intelligence workloads, and the strategic imperative for MENA nations to position themselves as global digital hubs.

The technology sector’s 18% share encompasses a diverse range of sub-sectors, from enterprise software and cybersecurity to semiconductor supply chains and AI platforms. MENA SWFs have been particularly active in late-stage venture and growth equity rounds, participating in billion-dollar funding events for AI companies, cloud computing providers, and digital health platforms. The healthcare allocation at 9% similarly reflects a strategic bet on digital health, biotech, and medical technology — sectors that align with national visions for healthcare modernization across the GCC. Understanding sector-level allocation patterns is essential for any investor benchmarking their portfolio, and the EY Wealth and Asset Management insights hub provides ongoing research on these themes.

Artificial Intelligence and Digital Infrastructure Investments

Perhaps no investment theme defines the current MENA SWF strategy more clearly than artificial intelligence. The scale of capital committed is unprecedented: one major MENA sovereign wealth fund announced a US$100 billion fund dedicated to AI infrastructure, semiconductors, and core AI technologies. Another partnered with a leading US venture capital firm to create a US$40 billion AI-focused investment vehicle. A third pledged US$10.9 billion to French startups and technology funds concentrating on AI, semiconductors, and digital healthcare.

These headline-grabbing fund commitments are complemented by a dense network of smaller but strategically significant investments. A MENA-SWF-backed AI technology company received US$1.5 billion in fresh capital in April 2024. A US-based cloud computing firm committed US$10 billion to building data centers in Saudi Arabia, while another US technology services provider announced US$250 million to establish a global software lab in the kingdom. A major enterprise software vendor committed US$500 million to the region’s digital transformation programs. The cumulative effect is the rapid emergence of the GCC — and Saudi Arabia in particular — as a global AI infrastructure hub.

At the smaller end of the spectrum, MENA SWFs have launched targeted vehicles such as a US$180 million fund focused on fintech, edtech, healthtech, and cleantech. These early-stage investments serve a dual purpose: financial optionality in high-growth verticals and knowledge transfer that supports domestic innovation ecosystems. The Stanford AI Index Report confirms that sovereign wealth funds globally are among the fastest-growing sources of AI capital, with MENA funds leading the charge in absolute dollar terms.

Energy Transition and Green Asset Allocation

Despite their hydrocarbon origins, MENA sovereign wealth funds are increasingly positioning themselves as major players in the global energy transition. Investment by sovereign investors in green assets reached a historic peak of US$26.1 billion in 2023, with nearly half of that amount attributable to GCC-based funds. This marks a dramatic shift from 2018, when green assets attracted just US$5.8 billion compared to US$16 billion flowing into traditional “black” energy assets.

The inversion of this ratio is accelerating. Green asset deal counts have surged from 20 in 2018 to 91 in 2023, while black asset deals have remained relatively stable at 15. EY’s survey of 58 sovereign wealth funds reveals the depth of conviction behind this pivot: 100% of respondents rated renewable energy as an attractive investment segment. Energy storage followed at 79%, electrified transport at 74%, and sustainable materials at 67%. Only electrified heat, at 40%, attracted less than majority support.

On-the-ground deployments reinforce these survey findings. MENA SWFs have financed 330 MW of renewable energy power purchase agreements in South Africa and a massive 2.6 GW renewable solar project valued at SAR 1.7 billion. These investments serve multiple strategic objectives: generating risk-adjusted returns in growing markets, building operational expertise in energy technologies that will define the post-hydrocarbon era, and fulfilling increasingly stringent ESG commitments that institutional co-investors demand. For a broader view of how sustainability is reshaping institutional investment, the World Economic Forum Global Risks Report analysis offers relevant context on climate-related financial risks.

Private Credit as an Emerging Asset Class

Private credit has emerged as one of the most compelling new frontiers for MENA sovereign wealth fund allocation. The global private credit market has grown to over US$1.8 trillion in assets under management, with a potential addressable market that EY estimates could reach US$30 trillion. Yet the Middle East currently accounts for just 0.2% of global private credit AUM — a glaring underrepresentation that MENA SWFs are beginning to address with significant commitments.

Recent transactions illustrate the pace of expansion. In October 2024, a MENA SWF invested US$750 million in debt from an India-based airport infrastructure company. In September 2024, another participated in a US$25 billion private credit and direct lending program. April 2024 saw a US$1 billion commitment to a new US$2 billion private credit fund, while February 2024 brought a US$1 billion partnership to co-invest in private credit across the Asia-Pacific region. Even at the fund-of-funds level, a US$53 million investment into a US$325 million credit vehicle demonstrates appetite across the size spectrum.

The strategic rationale for private credit expansion is particularly strong in the MENA context. Small and medium enterprises account for over 90% of businesses in the region and contribute up to 70% of GDP in some countries, yet commercial banks dedicate less than 2% of their lending portfolios to SMEs. This structural credit gap creates a compelling opportunity for private credit funds backed by sovereign capital to fill the void — generating attractive yields while catalyzing economic development. The current composition of Middle Eastern private credit is dominated by general debt (one-third of AUM), credit special situations (27%), and direct lending (12%), with significant room for growth across all categories.

Asia-Pacific Expansion and Geographic Diversification

The Asia-Pacific region has become the fastest-growing geographic allocation for MENA sovereign wealth funds, reflecting a strategic pivot toward the world’s most dynamic economic zone. MENA SWFs have significantly increased their investment activity across India, Japan, South Korea, and Southeast Asia, drawn by favorable demographics, rapidly growing middle-class consumption, technology innovation ecosystems, and infrastructure development needs that align well with sovereign capital’s long-duration investment horizon.

India has attracted particularly strong interest. The US$750 million airport infrastructure debt investment mentioned earlier is representative of a broader theme: MENA SWFs are deploying capital across India’s transportation, logistics, financial services, and digital economy sectors. Japan’s combination of undervalued corporate assets, governance reforms, and technology leadership makes it another priority market. South Korea’s semiconductor industry and Southeast Asia’s digital economy — encompassing ride-hailing, e-commerce, fintech, and digital banking — round out the geographic diversification strategy.

This Asia-Pacific pivot is not merely opportunistic; it reflects a fundamental strategic reorientation. As MENA economies build long-term partnerships with Asian counterparts through trade agreements, energy supply relationships, and technology collaborations, SWF investments serve as financial anchors for these deepening bilateral relationships. The Asian Development Bank’s Economic Outlook projects that developing Asia will grow at approximately 4.9% annually through 2026, reinforcing the investment thesis that underpins MENA SWF allocations to the region.

Exit Strategies and Divestment Trends

The exit environment presented a mixed picture for sovereign wealth funds in 2024. Globally, SWF exits totaled US$68 billion across 60 transactions — a significant decline from the US$180.1 billion in exits recorded in 2023. MENA SWFs specifically completed US$29 billion in exits across 22 deals, a sharp drop from the US$102.6 billion in 2023 (though that figure was inflated by a single US$74 billion divestment of a US-based video game publisher).

The composition of exits in 2024 reveals important structural shifts. Strategic sales dominated at 40% of total exit value, followed by secondary transactions at 28% and IPOs at 23%. Open-market secondary sales and other exit types accounted for the remaining 9%. The relatively subdued exit volumes reflect a broader private markets dynamic: a backlog of portfolio companies awaiting monetization has built up as the divestment environment remained challenging through much of 2024, with valuation gaps between buyers and sellers persisting across many sectors.

Looking ahead, EY expects the exit environment to improve in 2025 as interest rate reductions gain traction, equity market valuations provide more attractive IPO windows, and secondary market activity increases. For MENA SWFs sitting on significant unrealized gains across technology, healthcare, and financial services portfolios, the coming cycle could unlock substantial liquidity — capital that will likely be recycled into the AI, energy transition, and private credit themes that dominate current deployment strategies.