Gulf sovereign wealth funds maintain $25 billion investment pace despite regional conflict

Gulf sovereign wealth funds maintained their investment momentum during the first quarter, despite nearly a third of the period coinciding with active conflict in the region.

Data from the consultancy Global SWF, first reported by Semafor, indicates that the Saudi Public Investment Fund (PIF), Abu Dhabi-based Mubadala, and the Qatar Investment Authority (QIA) deployed a combined total of approximately $25 billion in new capital during the quarter. Absent the outbreak of hostilities, this trajectory suggested a record-breaking year for state-owned investors.

This resilience reflects the extraordinary scale of Gulf capital. The primary funds in Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) currently hold an aggregate value of $5 trillion, a figure projected to climb to approximately $18 trillion by 2050.

Diego López, founder and managing director of Global SWF, noted that a prolonged conflict would likely dampen the pace of overseas investment. Regarding future developments, he suggested that strategies implemented during the COVID-19 pandemic could serve as a roadmap.

López observed that certain entities, such as the Abu Dhabi Investment Authority (ADIA) and the Kuwait Investment Authority (KIA), could be utilized to bolster public budgets, potentially slowing allocations to private markets. Other funds may pivot to support conflict-affected sectors like aviation or provide financing for domestic defense enterprises, including EDGE in the UAE, SAMI and SAFE in Saudi Arabia, and Barzan in Qatar. Both strategies would reduce the capital available for international ventures while supporting domestic economic diversification plans.

The ultimate destination of Gulf capital remains a central question for government officials and investors meeting in Washington this week for the World Bank and IMF spring meetings. Beyond immediate energy supply concerns, the core issue is whether energy disruptions stemming from the conflict with Iran—which are already weighing on the global economy—will prompt a shift in sovereign fund priorities and how that would reverberate globally.

For now, operations continue “business as usual,” a stance reiterated by numerous Gulf officials and supported by Global SWF data. The long-term outlook depends on the resolution of the conflict. Should hostilities cease within months and trade flows normalize, Gulf states would likely see renewed budget surpluses, returning them to their perennial challenge: where to allocate the capital.

While it may be fashionable to suggest these funds might curtail investments to signal displeasure with the US—the nation that initiated the conflict—the reality is more pragmatic. Gulf investors are unlikely to divert tens of billions of dollars to non-US competitors of OpenAI or Anthropic for the simple reason that such alternatives do not exist. The depth of US public and private markets, combined with its technological lead and entrenched ties in defense, energy, and finance, makes a rapid strategic pivot improbable.

Although a general slowdown in capital flows would not be unexpected, some funds may accelerate deployment to acquire distressed assets. “We may see funds… acting opportunistically to identify attractively priced opportunities in specific geographies and segments,” López said, noting that the Saudi PIF followed this pattern during the pandemic. He added that Mubadala is also well-positioned to capitalize on market imbalances.

Unlike previous crises triggered by low oil prices or global credit crunches, the current shock involves a direct threat to the region. With Iran effectively closing the Strait of Hormuz, a significant portion of oil-derived wealth is effectively stranded. The World Bank forecasts that growth in the Gulf will slow to 1.3% this year, down from 4.4% in 2025, while regional officials estimate tourism losses could reach $32 billion. The economies of Kuwait and Qatar are expected to contract by more than 5%, according to the World Bank.

Despite these pressures, sovereign wealth deals continue to follow pre-war patterns. According to Global SWF, nearly 60% of Gulf overseas investment over the last five years has targeted financial services, infrastructure, and technology, with the US share of that total steadily increasing. Recent transactions involving OpenAI, Anthropic, Electronic Arts, and Paramount Global indicate that Gulf investors are not retreating from previous commitments.

Private equity deployment also remains active. Last month, entities linked to Abu Dhabi Crown Prince Sheikh Tahnoun bin Zayed Al Nahyan participated in a funding round for the $10 billion fitness wearable startup Whoop and agreed to acquire Oklahoma-based Traverse Midstream Partners for $2.25 billion. Additionally, last week, another Sheikh Tahnoun-led firm acquired a majority stake in a UK-based hospitality group—valued at over $1.3 billion—which includes The Ivy restaurant chain and the private members’ club Annabel’s.

Gulf economies are undeniably under strain, requiring government adjustments. Allocation decisions may take longer as defense, incentives, and reconstruction take priority. However, while the war may disrupt the pace of investment, the deal flow during the conflict suggests that the region’s wealth is now too deeply integrated into the world’s largest economies to be easily halted.