The Gulf's secondaries market is moving from niche finance to a more important capital channel as investors hunt for liquidity.
With traditional exit routes such as IPOs slowing, secondaries have become a more attractive option amid tougher fundraising conditions and slower exits, according to Fortune's reporting. Secondaries involve the buying and selling of pre-existing investor commitments and ownership stakes in private equity and VC funds, a structure that can be harder to track because the trades are private.
The numbers come first. Gulf secondary-market turnover on Bloomberg's electronic markets platform almost doubled from $22 billion in 2022 to $40 billion in 2025. Over the same period, issuance increased from $246 billion to $452 billion, and average electronic trade sizes grew from around $500,000 to $900,000.
The region's startups raised $3.8 billion across 688 deals in 2025, a 74% year-on-year increase, according to a report by Magnitt. Even as VC investment across the Middle East accelerated, liquidity mechanisms struggled to keep pace. The average active operational exit horizon for VC and private equity firms in MENA stood at six years in 2025.
M&A remained the primary pathway to liquidity, with 46 M&A deals across MENA last year. Technology IPOs were rare under stringent profitability requirements in localized markets such as the UAE, and there were just two MENA IPOs last year.
That gap is helping drive dedicated secondary funds. Basil Moftah, co-founder and managing partner of Key Capital, said he became 'very aware of the liquidity struggle' after working in VC investing for a long time. Key Capital, based in Abu Dhabi, launched last year with Leena Khalil to provide direct and structured liquidity solutions for founders, employees, early investors and fund managers in high-growth technology companies.
In May, Key Capital entered a strategic partnership with SHUAA Capital to support the development of the VC secondaries market across MENA and EMEA. Its Key Fund I is targeting a $50 million fund size and will buy secondary stakes directly from existing shareholders without appearing on the company's capitalization table.
Moftah estimates the regional secondaries market at around $1 billion, while global secondaries transaction volumes reached a record $240 billion in 2025. He said demand for liquidity has come from across the Gulf, North Africa and the Levant, with interest spanning e-commerce, edtech, proptech, fintech, insuretech, SaaS and AI.
Capital rewards clear rules. When IPO markets slow and fundraising tightens, private companies look for another way to turn paper gains into real liquidity. The Gulf is building that machinery now, and investors are following the signal.
