This week, we look at how the Gulf states are shaping up as key players in a reordered world economic landscape, and how resilient mid-market strategies will stand out in the months ahead.
Bridging the Gulf
“The Middle East is not merely a stage for great power competition. It is becoming a co-architect of a new financial order.” And China is set to play a significant role in this.
That is the assessment of Zhu Zhaoyi, executive director of the Middle East Institute at the Peking University HSBC Business School. He was speaking in Singapore recently at a conference convened by the National University of Singapore’s Middle East Institute, discussing the geopolitical order.
In a way, significant allocations from the Gulf sovereign wealth funds over the last decade have propelled them to become the biggest – and increasingly influential – global investors.
More recently, that clout is being facilitated in part by the growing number of private capital firms that operate across the China-GCC corridor, with existing businesses in Asia that are primed for expansion into the Gulf amid a broader hunt for growth.
Indeed, even as a number of commentators have already pointed out that China is preparing for a complete economic ‘decoupling’ from the US, with trade falling to nothing, there are efforts to work around the loss of a major market and trading partner. Apart from China, most other countries in Asia also face stiff tariff penalties that hurt business and investment activity.
One school of thought is that the Gulf region, and to a certain extent South and Southeast Asia, represent markets to help absorb some of the manufacturing overcapacity that China has, from textiles to building materials, and electric vehicles. That could, in some way, still support growth through increased intra-region activity.
Trade relations between China and the Gulf states, for instance, have expanded from about $32 billion in 2006, as noted by the US Council on Foreign Relations then, to some $400 billion in 2023.
Still, these markets would only be able to absorb a limited amount of that overcapacity, others have noted.
The real value could be in how the Gulf states have the potential to serve as a relocation for Chinese manufacturers for goods that are ultimately destined for the large and deep markets in the West, not unlike how Southeast Asia has become a key choice for companies diversifying production away from China.
In his comments at the conference, Zhu was referring to how the Gulf region, in particular the UAE, is emerging as a leading market in digital payments and digital currencies as the states transform their economies away from oil. And, how it may prove to be one platform for China to access markets that are ostensibly closed to it.
As part of its ambitions to augment its international financial centre status with being a global hub for digital assets, Hong Kong has recently passed a law allowing businesses to use stablecoin, or a digital asset pegged to real-world assets, including the US dollar.
As Zhu noted: “The UAE provides the model, Hong Kong provides the financial infrastructure, and both connect China and the US to a shared interest in the next configuration of global demand.”
How will the mid-market playbook pay off?
While large and mega-caps grab the headlines, it is the mid-market companies that offer investors a strategic playground for operational value creation.
Unigestion, in its latest insight, calls this private equity’s sweet spot. Mid-market companies often trade at lower EBITDA multiples than large-caps, leaving more room for multiple expansion.
The trend of mid-market deals delivering stronger average returns, which has been especially pronounced in Europe, is now visible in Asia-Pacific.
The real question is: Are investors disciplined enough to focus on operational levers rather than financial engineering? This is where the mid-market shines. Many businesses lack professional systems and structures, giving investors freedom to drive transformation.
Brookfield Asset Management, for instance, takes a stage-by-stage approach—introducing IT upgrades, cross-border integration, and governance improvements—to lift cash flows in family-owned businesses.
EQT applies a structured playbook in Southeast Asia and India, even deploying an “exit liquidity committee” to keep monetisation routes open.
Tower Capital Asia highlights relationship-driven origination. Its framework helps uncover companies with compelling narratives, capable leadership, and unique strategic positions.
But even with value creation in place, how do investors convert operational wins into real distributions for LPs?
Historically, the challenge in the Asian mid-market has been DPI and accessibility. But macro drivers—large markets, strong demographics, growing GDP – could lead to more robust exit options as larger-cap funds in maturing buyout markets seek scaled businesses.
And, the resilience of the mid-market lies in strategies like buy-and-build, bolt-ons, and operational upgrades—approaches that work across cycles without relying on leverage or IPO windows.
Top APAC developments
Deals
KKR has announced the acquisition of the South Korean cosmetics packaging company, Samhwa Co., from TPG.
Blackstone is making a significant investment in the South Korean hair salon business JUNO, in its fourth PE deal in the country.
Japan’s Gakken Holdings and Vietnam-based private equity firm ABB have acquired a majority interest in Hanoi-based Quang Ich Technology Group (QIG), a provider of learning management systems.
Fundraising
Amid a broader slowdown, only one Southeast Asia-focused private equity firm managed to close its fundraising in the first half of this year, according to DealStreetAsia’s latest report tracking PE funds in the region.
Hong Kong-based PE firm ZQ Capital is nearing the final close of its first blind-pool fund, which has a hard-cap target of $300 million.
Earnings
CVC Capital posted a net profit of 396 million euros ($464 million) for the first six months of 2025. Realisations totalled 13.2 billion euros over the last twelve months, 20% higher than last year
People
Former Malaysian Employees Provident Fund head of Strategic Investments, Shahazwan Harris, has joined UK-based Nordstar Partners as a senior advisor for the consulting firm’s Asia strategy, supporting portfolio companies and fundraising, according to his LinkedIn profile.
Global alternatives firm Oaktree Capital Management has reportedly hired Roger Zhang to lead the firm’s new Asia Pacific private debt strategy.
Joseph Khoo has joined StateSquare Capital as a Partner. He comes from Quadria Capital, where he was Managing Director, leading healthcare investments in Asia. Before that, Khoo was at Partners Group.
What’s next: DealStreetAsia’s Asia PE-VC Summit 2025
At the 10th Asia PE-VC Summit in Singapore next week (Sept 10-11), the LP and PE tracks will spotlight trends reshaping capital allocation across Asia. We have put together 14 PE-LP sessions that will examine untapped opportunities, strategies from buy-and-build to private credit, and how managers navigate delayed exits, regulatory hurdles, and sectoral shifts.
Country-specific panels will dive into India, China, Southeast Asia, Japan, and the Gulf region to evaluate the impact of macroeconomic shifts, demographics, and regulatory reforms on PE flows. The sessions aim to provide a clear view of where value is emerging, how capital is moving, and which strategies are proving effective across Asia. Do check out the PE-LP tracks and the 120+ speaker collective at the Asia PE-VC Summit 2015.
