Skip to content
King Abdullah Financial District Riyadh

How MENA SWFs are using investment strategies to future-proof their economies

Authors

5 minute read 26 May 2025
Related topics
Wealth and asset management
Financial services
Government and Public Sector

In brief

  • MENA Sovereign Wealth Funds (SWF) are enhancing their investment strategies by focusing on diversification in infrastructure, finance and sustainable technologies.
  • MENA SWFs are focusing on integrating AI, forming strategic partnerships and investing in renewable energy while modernizing asset allocation to drive growth and enhance governance

The global economy is undergoing significant transformation, shaped by evolving geopolitical uncertainty, energy transitions, digital disruption, and inflationary pressures. Amid this volatility, Sovereign Wealth Funds (SWFs) in the Middle East are emerging as stabilizing forces, deploying capital not only to secure returns but also to help transform regional economies.

The latest report published by EY MENA, “How MENA SWFs are using investment strategies to future-proof their economies,” explores how these state-owned investment vehicles are navigating global shifts, steering national growth agendas, and reimagining long-term value creation. With assets under management (AUM) surging by 59% since 2020 and a sharper focus on innovation, sustainability, and global diversification, MENA SWFs are positioning themselves at the epicenter of strategic capital flows.

Increase in AUM of MENA SWFs
since 2020, significantly boosting their financial firepower.

Download the full report

How MENA Sovereign Wealth Funds (SWFs) are using investment strategies to future-proof their economies

 

Download

Fueled by elevated oil prices and robust current account surpluses, MENA SWFs significantly expanded their capital base through 2024. These firms represent over 40% of global SWF AUM. MENA has the world’s largest concentration of sovereign-owned assets that are more than 1.4 times its GDP (2024). This is in comparison to 0.01 times in North America, 0.1 times in Europe and 0.1 times in Asia. With MENA’s real GDP projected to outpace that of advanced economies and reach 4% growth by 2026, the region is poised for significant economic expansion. The intersection of state-backed capital and strategic policy is unlocking strong momentum across non-oil sectors.

Expected GDP growth in MENA
Descriptive copy* in 2025, a rise from 1.9% in 2024.

This favorable backdrop is expected to enhance both foreign- and domestic investments, further strengthening the influence of MENA SWFs. In 2024, these funds significantly increased their direct investment activities, allocating approximately US$165b across 53 global deals, particularly in financial services, digital infrastructure and health care. This diversification reflects their adaptive strategies in response to emerging market trends.

Exit activity, on the other hand, remained muted, driven by market uncertainty, lower valuations and strategic patience. As a result, SWFs are shifting from passive holders to active stewards of their portfolios, focusing on long-term value creation and selective divestments aligned with Environmental, Social, and Governance (ESG), and economic diversification goals.

MENA SWFs are strategically channeling their investments into four key areas:

The integration of AI has become a focal point for MENA SWFs, showcasing their commitment to leveraging technological advancements. Additionally, MENA SWFs are pivoting toward sustainability by investing in renewable energy sources and technologies. Their focus on green initiatives, such as solar and wind energy, electric vehicles, and sustainable manufacturing, demonstrates a proactive approach to aligning with global decarbonization efforts. This strategy not only supports environmental goals but also positions these funds as leaders in the transition to a low-carbon economy.

MENA SWFs investing in green technologies
allocated to energy transition projects in 2023, showcasing their commitment to supporting sustainable initiatives.

Explore our Offerings

Notably, the private credit sector presents a largely untapped opportunity for MENA SWFs, which currently holds only 0.2% of global AUM in this area. While the region is experiencing a transformative phase in financing its real economy, particularly in sectors such as consumer credit, equipment purchases and data centers, private credit can step in to bridge the financing gap by offering flexible, structured long-term capital tailored to these projects, which may not meet traditional lending criteria.


The Asia-Pacific region has become a strategic priority for MENA SWFs, with investments reaching approximately US$33.6b in 2024, more than double the previous year. Key sectors attracting these investments include financial services, real estate, health care and consumer markets, driven by the region's economic growth potential and favorable regulatory conditions.


Looking ahead to 2025, MENA SWFs will need to navigate significant political uncertainties and potential regulatory changes in key markets. These factors may impact investment strategies and necessitate a cautious approach. To address these challenges, MENA SWFs have identified a number of priorities for the future, including:

  • Integrating AI and digital tools into investment processes
  • Expanding partnerships with development banks and private investors
  • Leading investments in renewable energy
  • Modernizing asset allocation strategies to adapt to a complex geopolitical landscape
  • Prioritizing social impact to balance national wealth preservation with broader social goals
  • Enhancing governance to improve transparency and accountability in decision-making

 

MENA SWFs are at the forefront of a transformative investment landscape, focusing on technology, sustainability and diversification. As they navigate the complexities of the global economy, their strategic initiatives will play a crucial role in shaping the future of investments in the region and beyond. The commitment to innovation and sustainability positions MENA SWFs as key players in the evolving investment landscape, driving growth and fostering economic development in the years to come.

Summary

MENA is rapidly positioning itself as a global hub for investment and innovation, driven by strong economic fundamentals and forward-looking policy initiatives. In 2024, private equity investment value in the region surged 4.8 times, backed by robust capital inflows, strategic reforms, and infrastructure growth. MENA SWFs now manage over US$5t—40% of global SWF AUM—while shifting from passive capital to leading high-impact, global transactions totaling US$153b. With a strong focus on infrastructure, financial services, and digital transformation, the region is aligning with global trends, especially in AI and energy transition. Amid geopolitical uncertainty, they aim to balance financial returns with social and environmental impact, positioning themselves as key players in the global investment landscape.

How EY can Help

About this article

Authors

Related topics
Wealth and asset management
Financial services
Government and Public Sector

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
You are visiting EY mena (en)
mena en