Middle East sovereign wealth funds set for transformative growth amid global shifts: Bain & Co.

Middle Eastern sovereign wealth funds (SWFs) are entering a pivotal decade as they reshape portfolios and expand sources of capital to sustain growth amid higher interest rates, geopolitical fragmentation and the global energy transition. Bain & Co. estimates the region accounts for roughly 40 percent of assets held by the top 10 SWFs, which together control more than 75 percent of global sovereign wealth assets. SWFs globally reached about $15 trillion in assets under management in 2025 and are projected to nearly double to $30 trillion by 2035.

“The next generation of leading sovereign wealth funds will be defined by their ability to deploy capital strategically, create value operationally, and deliver their dual mandate in a targeted and sustainable way while delivering world-class returns,” said Gregory Garnier, partner at Bain & Co. and head of the Private Equity and Sovereign Wealth Fund practice in the Middle East.

Strategic shifts in allocation and deployment

Bain’s analysis highlights a clear recalibration across major funds. Alternative assets have grown to roughly 30 percent of assets under management among leading SWFs, up from about 20 percent in 2015. Direct investments and co-investments now account for an estimated 50 to 60 percent of private market deployments, reflecting a move away from purely fund-of-funds strategies toward hands-on investing.

• Debt issuance and capital recycling are emerging as important funding tools as sovereign investors diversify their financing beyond government transfers.
• Geographic focus is shifting, with a growing emphasis on Asia, while SWFs also aim to balance global return objectives with domestic economic priorities.
• Artificial intelligence has become a major investment theme and operational priority, with sovereign investors committing more than $350 billion globally to AI-related investments — spanning semiconductors, data centers, applications and infrastructure.

The report underscores the dual mandate many sovereign investors now pursue: preserving and growing financial capital while using investments to drive national economic development. Funds are increasingly deploying capital to support economic diversification, build strategic industries and enhance long-term competitiveness.

One high-profile illustration is the Public Investment Fund’s lead role in a consortium to take Electronic Arts private in a deal valued at $55 billion, a transaction expected to close in the first quarter of 2027. Such blockbuster deals signal SWFs’ willingness to execute large-scale, transformational transactions that also align with national strategic objectives.

Outlook — adaptation and execution will determine leaders

Looking forward, Bain warns that sustaining this momentum will require sovereign funds to navigate volatile hydrocarbon revenues, technological disruption and complex geopolitics while improving operational capabilities. The next decade will test funds’ ability to integrate private-market strategies, scale alternative investments, and leverage balance-sheet tools such as debt issuance and recycling to enhance liquidity and returns.

For Middle Eastern SWFs, success will be measured not only by asset growth but by the ability to channel capital into strategic sectors that underpin long-term, knowledge-based economic transformation — from AI and digital infrastructure to industrial and technological capabilities — all while delivering competitive returns for future generations.