Key summary:

The Gulf’s sovereign funds are entering a new phase, in which the real test is whether the companies they built can stand on their own outside the system that created them.
Scale built inside a highly coordinated state-backed ecosystem does not automatically translate into a credible proposition outside it, because strong economics and clear market interpretation are not the same thing.
ACWA Power offers a concrete example of this translation in practice: a company PIF describes as a ‘national champion’, still has to build a separate investor case around growth, cash generation and international expansion to be understood on commercial terms abroad.
As the companies built to compete globally begin to separate from those still reliant on home-grown support, the next stage of Gulf value creation will be defined by which advantages will resonate beyond its own ecosystem.

Why the Gulf built through sovereign capital

Over the past decade, state-backed capital has been central to the Gulf’s growth which has been spearheaded by Saudi Arabia’s Vision 2030. The initiative set out to reduce the Kingdom’s dependence on oil by building a more diversified economy, establishing new industries, creating employment and increasing the role of private and international investment.

The initial inception of state-backed funds like PIF, were repositioned and scaled up to drive this economic development with the distinct advantage of being able to allocate capital against a much longer national horizon. As a consequence, the companies within the portfolio didn’t need to be built around a near-term exit and instead, could focus on optimising for system-level value rather than forcing every company to maximise its own near-term financial outcome in isolation.This strategy has enabled its assets under management to grow from around $150 billion in 2015, to more than $900 billion today with more than 220 portfolio companies and over $199 billion invested into new Saudi projects between 2021 and 2025.

This sovereign model also allowed capital to be deployed across entire infrastructures enabling industry creation, activation of local capabilities and producing the conditions needed for new sectors to take shape. Mubadala’s development in Abu Dhabi reflects a similar logic, having been established to support the UAE’s economic diversification before developing into a global investment institution, with $385 billion in assets under management and operations spanning more than 80 markets.

One of the most compelling aspects of this approach is around how companies created within these ecosystems are able to produce more than one form of value; they may generate returns, but are doing so whilst also building domestic expertise, reducing reliance on imports and strengthening national resilience. They are both commercially and strategically important to the region, illustrating how commercial value, when carefully mapped and considered, can also translate into wider socio-economic impact.

From growth to value realization

Following this large-scale economic construction, which to date has produced tangible progress, PIF now describes 2021–2025 as a period of “Growth and Acceleration” and 2026–2030 as one of “Value Realization”.

Part of this emerges for practical reasons as PIF has less income coming through from Aramco dividends than before, at a time when lower oil revenues are also placing greater pressure on how Saudi Arabia prioritises its spending.

Additionally, the IMF has argued for a more selective role for PIF with its latest strategy placing greater emphasis on the maturing of these sectors, by being able to attract private capital without relying on the state to remain the primary source of growth.

This shift is already visible in the regulatory and investment environment, as well as at the company level. ACWA Power, which PIF describes as a Saudi ‘national champion’, has increasingly built its case around capabilities that can attract capital and support expansion outside the Kingdom. By the end of 2025, the company reported SAR437.5 billion in assets under management, while during the same year it expanded into markets including China, Bahrain and Kuwait, as well as desalination projects in Azerbaijan and Senegal. Its SAR7.1 billion rights issue in 2025, which achieved 96% subscription among rights holders with the remaining offering nearly six times oversubscribed, provides one indication that investors were willing to fund that growth.

This same transition is beginning to take shape across other sectors. Riyadh Air is building a global airline “from a blank sheet, no legacy systems, no legacy fleet, no legacy ways of thinking,” as described by CEO Tony Douglas. Red Sea Global is making a comparable case to international investors and luxury travellers, positioning its destinations directly against the Maldives, Seychelles and French Polynesia on the strength of the experience itself, not simply the PIF relationship behind it.

Each company is solving a different version of the same problem that ACWA has already begun to answer; can the enterprise advantages built at home continue to create value once the company is competing for capital, customers and growth elsewhere.

Value has to be made commercially credible and understandable

Making value visible isn’t simply a matter of explaining a company more persuasively. For external market recognition, it has to hold together commercially.

A company may have strong assets, considerable scale and strategic importance, yet still present the market with a fragmented picture of where its advantage sits, what impact it will have and how its commercial output can develop into something larger.

This is where a critical distinction emerges between simply describing what a company thinks its own value is (which too often is reduced to marketing, brand and sales tactics), vs having an underlying commercial strategy to ensure the whole business, and its portfolio, is understood and bought in by the market.

This covers:

Hierarchy: which capabilities matter most, which problems they solve, and which forms of value should lead.
Pathways: where a customer, investor or partner enters the company, what makes the initial proposition credible, and how that relationship expands.
Clarity: around where strategic importance becomes economic advantage, and where individual products, capabilities or assets combine into something the market can understand as a coherent whole.

Without this structure, even the very best of businesses can become difficult to interpret. Value recognition should not be reduced to perception and measured on whether the market believes a better story - such an output will inevitably collapse under pressure. The fundamental question is whether the underlying strength of the business has been organised clearly enough for people to evaluate, access and act upon.

The next test is where the advantage really sits, and if it can travel

The deeper consequence of this shift is that value realisation will begin to separate advantages created by the surrounding system, from those that genuinely belong to the company.

Access to capital, policy support, domestic demand and coordinated infrastructure may have been essential to creating scale, but they are not necessarily what will sustain returns once the company is competing for customers and capital elsewhere.

This distinction changes how these businesses should be assessed internally as well as externally, and it is no longer a question of whether an asset is strategically important, (a matter which has already been established). But instead, which parts of its performance reflect an advantage that can continue delivering the desired results, and which will remain dependent on conditions that may not integrate into their desired markets.

For Gulf sovereign portfolios, that may ultimately be the most important outcome of the value-realisation phase: moving beyond the creation of globally ambitious companies to identifying where durable commercial advantage actually resides, and whether it is strong enough to support genuine global competitiveness.