Global private credit firms are establishing a significant presence in Saudi Arabia, stepping in to fill a financing void created as the kingdom’s ambitious economic diversification projects drain liquidity from the local banking system. Giants from Goldman Sachs Group to Apollo Global Management are positioning themselves in a market where private credit was almost non-existent just a year ago.
The Strain on Saudi Banking Liquidity
The kingdom’s Vision 2030 plan, designed to reduce its reliance on oil, is consuming vast amounts of capital from local banks. This has limited their capacity to provide financing for other companies and projects, leading to a drop in medium-term loans for the first time in three years last quarter.
“The critical issue remains the tightness in the domestic liquidity with credit demand outstripping deposit growth,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. “Competition for deposits will remain strong and access to external borrowing will remain important for banks to raise funding.”
This liquidity squeeze is evident across the market, with some local developers reporting recent loan denials from Saudi lenders. The financing gap is a major topic for executives gathering in Riyadh for the Future Investment Initiative summit, a key event that often mirrors the MENA Investment Congress 2025 concludes in Abu Dhabi with record attendance.
According to Edmond Christou, a Senior Industry Analyst at Bloomberg Intelligence, Gulf banks’ liquidity will be challenged if oil falls below $65 a barrel, particularly as Saudi Arabia requires a price of $113 per barrel to balance its budget.
Private Credit Firms Seize the Opportunity
With traditional lenders constrained, the door has opened for alternative financing. Private credit, now a $1.7 trillion global market, is seen as an essential solution to the kingdom’s funding needs.
“In some cases, banks are even referring deals to us because they’re unable to finance them,” said David Beckett, head of origination and Middle East business development at asset manager SC Lowy. “Private credit, in general, is essential.”
This sentiment is echoed by major financial institutions. “The liquidity constraints and capital situation of the domestic banks create a real opportunity and it’s something that a lot of international banks are looking at,” explained Farouk Soussa, Goldman’s Middle East and North Africa economist.
Global Players Enter the Saudi Market
In response to this demand, major firms are making strategic moves. Goldman Sachs is relocating a top private credit executive from London to the Middle East. The firm’s asset management unit also secured an agreement with Saudi Arabia’s Public Investment Fund to anchor new funds focused on private credit and equity across the Gulf Cooperation Council countries. This trend reflects a broader pattern where entrepreneurs are expanding their business to the UAE and other regional hubs.
Other players are also expanding their regional footprint. Golub Capital and Blue Owl are actively growing in the area, while HSBC-backed Saudi Awwal Bank is planning its first private credit fund for the Middle East.
Marc Pinto, global head of private credit at Moody’s Ratings, noted that private credit is a natural fit for Saudi Arabia’s middle-market companies that cannot access public markets. “There’s a lot of talk about how great financing needs are in Saudi Arabia so I get the sense there are bigger deals coming,” Pinto said. He added that major firms like KKR & Co and Apollo are “sniffing around” to identify where the funding needs are greatest.
