The Gulf’s once fast-expanding dealmaking market has suffered a sharp slowdown as regional conflict disrupts IPO pipelines, M&A activity, and sovereign-backed transactions, according to a report by the Financial Times.
The slowdown has all put on hold expectations that investment banking fees could surpass $1bn for the first time in nearly two decades.
Just months ago, bankers across Dubai and Abu Dhabi were positioning for a record year, driven by sovereign wealth fund activity and a strong pipeline of listings that had turned the region into a global hub for capital markets and cross-border transactions. Early 2026 deal momentum had reinforced expectations of sustained growth in advisory fees and capital markets issuance.
That outlook shifted abruptly following the outbreak of conflict involving the US, Israel, and Iran, which has escalated regional uncertainty and prompted investors to delay commitments and reassess valuations. While a temporary ceasefire briefly restored some optimism, renewed attacks and ongoing geopolitical risk have kept dealflow subdued.
Investment banking revenues in the Gulf are now down around 14% year-to-date despite a strong first quarter, according to market data, with mergers and acquisitions activity particularly affected. Large-scale IPOs and strategic asset sales have been postponed as issuers and investors wait for clearer market conditions.
Several high-profile listings have been delayed, including Emirates Global Aluminium, which had been expected to be one of the region’s largest IPOs and a key test of domestic capital market depth. The offering has now been pushed back, alongside other planned listings linked to Dubai Holding and broader sovereign-related asset monetisation programmes.
Market participants say equity markets in the UAE remain below pre-conflict levels, while tens of billions of dollars in cross-border transactions involving Gulf capital are still pending completion. IPO activity, once among the most active globally, has slowed significantly outside of smaller, domestically focused offerings.
Despite the slowdown, some large strategic transactions continue to progress, particularly those linked to national energy champions and sovereign investors. However, even these deals are being closely reviewed in light of shifting capital costs, increased defence spending, and heightened risk perception.
Sovereign wealth funds, traditionally key drivers of global megadeals, are also reassessing portfolios and commitments as fiscal priorities evolve. While appetite for strategic investments remains intact, advisers note that pricing expectations and execution timelines have shifted materially.
Bankers expect a potential increase in restructuring and opportunistic transactions if weaker market conditions persist, although current valuation gaps have limited distressed activity so far. Many market participants now anticipate that a full rebound in dealmaking momentum is unlikely before 2026.
For now, advisers across the region describe a market characterised less by cancellations than by delays, as issuers, investors, and sovereign entities wait for greater geopolitical stability before reactivating a once highly active deal pipeline.
