Private capital rewrites the deal playbook in MENA

Private capital is gaining traction across the MENA region as investors move up the risk curve in search of yield, control and downside protection – particularly as public markets become more selective and liquidity conditions tighten.

Ziad Malak, investment banking head at Sico Capital, told IFN Investor that rigid approaches to valuation are increasingly proving counterproductive in the current environment. “Pricing gaps are one of the central challenges in the current environment, and the answer lies in creative structuring rather than walking away from transactions.”

While declining to disclose specific transactions or valuations, Ziad said earn-outs, deferred consideration, vendor financing and staged acquisitions are becoming more prevalent – allowing both sides to bridge differences while preserving upside.

Preference structures are also gaining traction in private transactions, helping align interests and manage downside risk. “Transaction structures have become more risk-sharing and less all-cash, all-at-close. Buyers are using these tools to conserve cash, bridge valuation gaps and keep deals moving.”

This shift is taking place after a recent strong cycle of IPO activity, with regional capital markets landscape entering a more measured phase, noted Ziad.

Recently-listed firms are giving focus to expansion, increasingly turning to acquisitions to drive growth, while family-owned businesses are showing greater openness to strategic partnerships and partial exits. This is gradually rebalancing activity toward private transactions and negotiated deals.

Over the next 12 to 24 months, deal flow is expected to concentrate around privatizations, consolidation plays and cross-border acquisitions led by GCC corporates seeking exposure to higher-growth markets. While public markets will remain active, issuance is likely to become more selective, reinforcing the role of private capital in funding growth and facilitating ownership transitions.

At the same time, cross-border capital flows are reshaping deal origination. GCC investors, particularly from Saudi Arabia and the UAE, are increasingly deploying capital into emerging markets across Asia, Africa and the broader MENA region, not only for financial returns but also to secure long-term strategic positioning.

Corridors such as Saudi-India, GCC-Egypt and GCC-Southeast Asia are seeing growing activity, supported by demographic alignment, trade linkages and sovereign priorities. “The flows we are seeing today are no longer purely financial. Clients are building long-term positions in markets that complement their domestic growth agenda,” Ziad said.

Alongside this shift, the distinction between conventional and Shariah compliant investing is becoming less binary and more embedded in structuring decisions from the outset. The Sukuk market continues to deepen, attracting issuers seeking access to a broader and increasingly global investor base, while equity transactions are being shaped by Shariah screening considerations around leverage and business activities.

“The implication is clear, Shariah compliance can no longer be an afterthought; it needs to be embedded in the structuring process early. Hybrid instruments that blend equity-like returns with Shariah compliant frameworks are becoming an area of growing interest,” Ziad added.