Middle East Startups Double Fundraising to Defy Slowdown - Bloomberg

Middle East Startups Double Fundraising to Defy Slowdown - Bloomberg

Startups in the Middle East nearly doubled their fundraising in the first half of the year, defying a slowdown in venture capital investment in emerging markets brought on by economic uncertainty and investor caution.

About $1.35 billion in VC funding was funneled to companies in the Middle East from January through June, led by Saudi Arabia and the United Arab Emirates, according to data platform Magnitt.

Middle East activity was anchored by government support, new funds and mega deals for companies including Saudi Arabia’s newest unicorn, quick-delivery firm Ninja. Investors also showed increased interest in Series A and B funding rounds that help companies start to scale their growth.

“Investor appetite, specifically in the GCC, is growing to later-stage companies compared to what we’ve seen in the last couple of years,” said Philip Bahoshy, chief executive officer and founder of Magnitt.

The Middle East’s haul stands in stark contrast to global emerging venture markets, where funding dropped to $3.98 billion — the weakest first half since 2017. The pullback was most acute in Southeast Asia amid uncertainty around interest rates, geopolitics and tariffs, according to the firm.

Saudi Arabia remains the powerhouse of VC fundraising in the Middle East, having raised more investment capital than any other country in the region for the third straight first half of the year. The kingdom saw over $245 million in new fund launches, with some backed by Saudi Arabia’s Public Investment Fund. Broader sovereign commitment to startup funding has been one of the key driver’s of the region’s success to date, according to Magnitt.

“We’ve seen a nine percent increase in investor participation in MENA-based companies, with fifty-four percent of that coming from outside the region, the highest level of international participation to date,” Bahoshy said. “So, while it [sovereign capital] is seeding the ecosystem, it’s also attracting international capital.”

Momentum across the Middle East was reinforced by US President Donald Trump’s visit to Saudi Arabia, the UAE and Qatar in May that resulted in a wide range of deals across sectors including aviation and AI.

Fintech remained the favored sector across the broader Middle East and North Africa in the first half, with funding tripling year over year and startups focused on payments and lending dominating activity.

In mergers and acquisitions, overall deal count held pace in the first half when compared to a year earlier, according to Magnitt. But the Middle East accounted for about 50% of deals, the highest share in two years, while deal flow fell in Southeast Asia.

“Volatility in the public markets and uncertainty is creating slight indecision,” Bahoshy said. “What we saw in Q2 is likely to reflect in Q3 and Q4, specifically in M&A and IPO uncertainty, which could impact the ability of companies to list and international acquirers willing to invest in the region.”

#UAE Share Sales Regain Momentum While #SaudiArabia Faces Valuation Test - Bloomberg

UAE Share Sales Regain Momentum While Saudi Arabia Faces Valuation Test - Bloomberg

The United Arab Emirates is seeing renewed momentum in equity capital markets heading into the second half of 2025, while Saudi Arabian firms eying share sales face investor caution over valuations.

Planned deals in the UAE are building on May’s successful debut of a residential real estate investment trust, which helped revive sentiment after several muted listings late last year. Dubai’s ALEC Engineering & Contracting LLC has been holding investor meetings ahead of a potential listing after the summer, according to people familiar with the matter.

Other real estate-linked offerings are also in the works, including contractor Arabian Construction Co. and online platform Dubizzle Ltd., Bloomberg News has reported. Dubai Holding, the conglomerate owned by the emirate’s ruler, plans to list a portfolio of malls and other commercial assets, following Dubai Residential REIT’s strong debut.

While the Gulf has broadly shrugged off volatility from regional conflict and tariff uncertainty, the UAE has outperformed. “The UAE is perceived to be more resilient — less tied to oil — and the economy’s diversification over the past few years has really paid off,” said Rami Sidani, head of frontier investments at Schroder Investment Management.

Abu Dhabi wealth fund Mubadala Investment Co. is preparing to offload at least part of its $1 billion stake in telecom operator Du through a follow-on offering that’s likely to launch shortly after summer, people familiar said.

Representatives for ALEC and Mubadala declined to comment.

While follow-on issuance across the region remains relatively limited, secondary offerings in the UAE outpaced IPOs in the first half of 2025. The trend has been driven by large placements in ADNOC Gas Plc, which raised just under $3 billion, and First Abu Dhabi Bank PJSC, which brought in $477 million.

“We’ve started to see a small shift,” said Rudy Saadi, head of Middle East and Africa equity capital markets at Citigroup Inc., which helped arrange both those offerings. “Not all ECM issuances are just IPOs today — there’s more debate and interest from shareholders about issuing different types of products, which is what the market needs.”

In contrast, Saudi Arabia, which remains the region’s busiest market for first-time share sales with over $3 billion raised this year, is heading into the second half with a more cautious tone. Disappointing debuts from Flynas Co. and Specialized Medical Co. have dampened short-term enthusiasm, particularly amid weaker oil prices and greater scrutiny of pricing.

“Investors still want exposure to the kingdom given the major diversification agenda, but they’re being more selective,” Saadi said. “The real conversation now is around valuation discipline and asset quality.”

Still, the kingdom’s deal pipeline is growing. Alandalus Educational Co. is working with EFG Hermes on a potential IPO, while Dubai-listed Amanat Holdings PJSC has tapped SNB Capital to explore listing its education business in Riyadh, people familiar with the matter said.

A number of firms are looking to tap into growing demand from infrastructure, tourism and industrial projects. Facilities management firms MAG and EFS are also planning offerings, while restaurant chain Al Romansiah is working with HSBC Holdings Plc and EFG Hermes on a potential deal, the people said.

Representatives for Alandalus, Amanat and EFS, as well as EFG, SNB Capital and HSBC, declined to comment. Al Romansiah did not respond to multiple requests for comment, and MAG couldn’t be reached.

Real estate developers Almajdiah, Al Ramz and building material supplier Marketing Home Group Co. have secured regulatory approval and aim to tap into rising housing demand under Vision 2030 and liberalized foreign ownership rules. Listings must be completed within six months of approval.

Companies across sectors — from car rentals and automotive cooling system providers to fintechs, tech firms, investment banks and coffee chains — are also preparing to go public.

Among state-backed firms, the Public Investment Fund is weighing a listing of a port operator, and chemical maker Sabic is considering a share sale in its industrial gas unit, Bloomberg News has reported.

That activity will test investor demand in a more price-sensitive environment. “Valuations in consumer and mid-cap names remain high,” said Sidani, though he noted that banks look more attractively priced.

Still, Saudi is a “compelling structural growth story,” he said, citing “ample” fiscal headroom and continued diversification efforts. A correction in valuations, he said, could bring back more foreign investors, “especially since Saudi still trades at a premium compared to other emerging markets.”

Investor interest across the region has also been supported by rising Gulf representation in emerging market indexes. “We’re seeing more global institutions leaning in,” said Nikita Turkin, head of Central and Eastern Europe, Middle East and Africa ECM at Barclays Plc. The bank is advising several founder-led companies in sectors such as technology, real estate, industrials and consumer goods that are preparing to scale or expand internationally.

Some of the region’s smaller markets are also preparing listings. Kuwait’s Trolley convenience store chain is planning an IPO, and in Qatar, state-backed Gulf International Services aims to list an insurance subsidiary and an associated catering firm.

Most Gulf bourses rise on US data, trade talks | Reuters

Most Gulf bourses rise on US data, trade talks | Reuters

Most stock markets in the Gulf ended higher on Tuesday after data showed a smaller than expected rise in core U.S. inflation and talks between Washington and major trading partners continued.

U.S. President Donald Trump signalled he was open to discussions on tariffs after his weekend threat to impose 30% duties on imports from the European Union and Mexico from August 1.

U.S. consumer prices picked up in June, likely marking the start of a long-anticipated tariff-induced increase in inflation that has kept the Federal Reserve cautious about resuming its interest rate cuts. However, the increase was in line with expectations and the core reading rose less than forecast.

The Fed's actions have a significant impact on the Gulf region's monetary policy, as most regional currencies are pegged to the U.S. dollar.

Dubai's main share index (.DFMGI), opens new tab advanced 1%, buoyed by a 5.2% surge in top lender Emirates NBD (ENBD.DU), opens new tab and a 1.8% increase in blue-chip developer Emaar Properties (EMAR.DU), opens new tab.

In Abu Dhabi, the index (.FTFADGI), opens new tab gained 0.7%, with Abu Dhabi Commercial Bank (ADCB.AD), opens new tab jumping 7.6%, its biggest intraday rise since April 2020.

The lender posted second-quarter net profit of 2.32 billion dirham ($631.65 million), exceeding analysts' consensus estimate, according to data compiled by LSEG.

The upbeat results boosted sentiment across the banking sector, with both Abu Dhabi and Dubai benefiting from renewed investor confidence in financials, said George Pavel, general manager at Naga.com Middle East.

"Dubai's market also drew strength from its real estate sector, adding to the positive momentum," he added.

The Qatari index (.QSI), opens new tab closed up 0.5%, led by a 1.7% increase in the Gulf's biggest lender Qatar National Bank (QNBK.QA), opens new tab.

Saudi Arabia's benchmark index (.TASI), opens new tab declined 1.1%, hit by a 1.3% fall in Al Rajhi Bank (1120.SE), opens new tab.

Elsewhere, oil giant Saudi Aramco (2222.SE), opens new tab fell 1.1%.

Oil prices - a catalyst for the Gulf's financial markets - were little changed after Trump's lengthy 50-day deadline for Russia to end its Ukraine war and avoid sanctions eased immediate supply concerns.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab gained 0.6%.