UAE resiliency and growth: an agenda supported by Private Credit

UAE resiliency and growth: an agenda supported by Private Credit

The second in a thought-leadership series by Channel Capital, in collaboration with academics, leading researchers and practitioners, on the role of finance in the innovation economy

Hadi Hassan, Bayes Business School, University of London, and Dr Walter Gontarek, Channel Capital Advisors

Introduction: A shift in priorities leading to a more resilient economy

By September 2026, the acute phase of the confrontation that unsettled Gulf capital markets earlier this year has receded from the UAE at least and for now.  The foreground of activity in the UAE appears to be picking up (our Emirates flight to Dubai was full this week, hotel occupancies are up above 60% and schools are full), the background also shows a shift in priorities to support local UAE businesses and growth priorities.

The structural shift that was already becoming clear to institutional investors in the region, away from bank-intermediated credit and toward a more diversified and more resilient ecosystem aligned with both Islamic financial principles and modern capital allocation to local businesses in need. ADNOC’s West-East pipeline to Fujairah, fast-tracked to route crude via the Gulf of Oman, is nearing completion, doubling the UAE’s export capacity outside the Strait. Another signal is the development of Fujairah’s terminal under development via DP World, giving customers greater choice, flexibility, and connectivity across regional and global trade routes. Channel’s recent new investment into the Beehive SME platform and its existing investment into FlapKap (a Sharia-compliant fintech financing which earned ABS Deal of 2025 in London), both support hundreds of UAE growth firms, is evidence of this more resilient approach to fund the UAE growth agenda.

That same instinct, to build a durable, diversified market rather than wait out the cycle, is exactly what is unfolding in private credit today. The United Arab Emirates, home to ADGM, DIFC, some of the world’s most ambitious AI infrastructure programmes, and soon the Sphere Abu Dhabi and Walt Disney Park, remains at the epicentre of this transition.

This growing local optimism continues to unfold against a somewhat challenged global and US backdrop for private credit generally. Goldman Sachs’ April 2026 Top of Mind report, “Cracks in Private Credit,” documented mounting pressure across the $1.8 trillion global market: growing US defaults, concerns about inflated valuations, and a concentration of risk in US software and now US AI-sector lending. Non-traded business development companies, the primary retail route into US private credit, faced quarterly redemption requests of 12% in the first quarter of 2026, with gross inflows down more than 50% against their prior run-rate.

Luckily, Channel Capital’s Corniche ABF strategy is structurally uncorrelated to those pressures with only a .30 positive correlation to the BoA ICE BB/BBB Credit Index. It is secured by short-duration financial cashflows/receivables within a securitisation or insurance format, very unlike long-dated unsecured US software loans, and remains anchored in the real economy.

The instinct to build a durable, diversified market rather than wait out the cycle, is exactly what is unfolding in private credit today.

Hadi Hassan

The funding gap has widened, not narrowed

As of publication, Channel Capital continues to build on its more than $1.3 billion+ of UAE lending deployment, with deep origination relationships across fintech platforms, e-commerce enablers, and technology-driven lenders. The UAE’s innovation economy still faces a structural funding gap estimated at over $250 billion across the broader GCC region, and if anything, the events of 2026 have sharpened the case for domestically structured alternatives to bank credit rather than diminished it. A September 2026 Khaleej Times article points out that private credit is gaining ground in the Gulf and could grow by 15-30% per annum, reaching $20 billion by 2030.  Some further statistics follow:

• UAE SME financing penetration remains below 7% of GDP, versus 20%+ in comparable developed markets
• Non-bank lending as a share of total credit stands at approximately 3% in the GCC, versus 40%+ in the US, as a benchmark
• The post-conflict reorientation of regional capital continues to accelerate demand for well-structured growth funding, often Sharia-compliant, alternative capital
• Regulatory authorities in ADGM and DIFC are actively expanding regulatory frameworks for private credit fund structures such as Cat 3 and Cat 4 platforms for private credit

The addressable market also extends well beyond the UAE’s borders. Dubai and the ADGM is the operating base for a growing number of fintech and SME lending platforms that originate receivables across the Middle East, Africa and South Asia, where bank credit penetration is lower still and financial inclusion gaps are wider. For Gulf institutions with regional investment mandates, UAE-anchored asset-backed structures offer access to that pipeline through a familiar legal and regulatory base.

FlapKap and Beehive: proof at two ends of the SME non-bank lending market

In 2025, Channel Capital closed a landmark transaction that was recognised with Alternative Credit’s ABS Deal of the Year award: a Sharia-compliant, structured asset-backed facility for FlapKap, a UAE-headquartered revenue-based financing platform serving merchants and SMEs across the Gulf. The transaction demonstrated Channel’s ability to structure a ringfenced facility around digital receivables that have little home in a traditional bank lending risk framework, to provide the liquidity certainty a high-growth fintech needs to scale without equity dilution, and to generate returns commensurate with credit risk rather than technology risk.

Channel’s participation in Beehive’s SME lending programme extends that thesis into somewhat larger SMEs in the UAE. The Beehive investment has since unlocked non-dilutive working capital for hundreds of SMEs across the UAE, businesses that are too small or too asset-light for traditional bank underwriting but generate exactly the cash-flow profile that asset-backed finance is designed to serve. Together, FlapKap and Beehive show the model working at both the platform level and at true SME scale by Channel Capital.

Channel’s UAE-based team members, together with a local Gulf-based Board Advisory Group with deep regional relationships, provide the institutional credibility and on-the-ground origination capability to replicate this model at scale.

Corniche Sharia: from concept to launched platform

For certain global investors, Sharia compliance is not a preference – it is a fiduciary requirement. Yet the market for Sharia-compliant private credit has historically been thin, dominated by commodity Murabaha structures that are administratively complex and usually offer limited yield differentiation and almost non-existent in private ABF credit.

Channel’s Corniche Sharia Investment Strategy has moved from design to execution, launching in July 2026. Backed by strong Sharia-compliant structuring from Khalij Islamic and linked to the popular Corniche ABF strategy with MSCI strength eligibility criteria, this new Islamic Series offers GCC institutional investors genuine Islamic private credit exposure, not a synthetic wrapper, but an end-to-end Sharia-compliant structure across origination, asset selection, and income distribution for international ABF.

Channel is now preparing further GCC-dedicated funds and separately managed accounts (SMAs) to extend the same architecture to be focused on Gulf based opportunities.

The UAE’s own Ministry of Finance has, in parallel, validated retail appetite for Sharia-compliant government paper. Its inaugural Sovereign Retail T-Sukuk programme, launched in June 2026, was oversubscribed nearly nine times on its first tranche and doubled in size in response, with retail investors, including a striking share of subscribers under 25 and women, accounting for the majority of participation. This is a clear signal of both regulatory intent and public confidence in Islamic finance structures in the UAE, a favourable backdrop for privately structured Sharia credit reaching institutional and, over time, a broader base of investors.

This new Islamic Series offers GCC institutional investors genuine Islamic private credit exposure, not a synthetic wrapper, but an end-to-end Sharia-compliant structure across origination, asset selection, and income distribution for international ABF

AI, technology, and the future of ABF underwriting

Channel’s proprietary Magic Credit Management technology and Crest Receivables collection management platforms, which are AI-led, facilitate quick decisioning and real-time portfolio monitoring, enabling credit decisions that are faster than a traditional credit committee process can deliver. In a market defined by fast-moving digital receivables, invoice flows, and revenue streams, the ability to monitor and act on collateral performance in real time remains a structural underwriting advantage.

The UAE’s own AI ambitions have only grown larger through 2026. Stargate UAE, the sovereign AI infrastructure cluster developed by G42 with OpenAI, Oracle, NVIDIA, Cisco and SoftBank, now carries a substantial cost, with its first 200-megawatt cluster on track to go live this year with partners requiring non-dilutive investment by firms such as Channel.

Adoption is accelerating in parallel, driven by the government mandate. In April 2026, under directives from the UAE President, the Cabinet announced a framework to transform 50% of government sectors to autonomous Agentic AI within two years. This positions the UAE government as a global blueprint for deploying Agentic AI at scale and is already accelerating the growth of the country’s AI entrepreneurial ecosystem. Agentic AI capabilities are increasingly valuable across private lending platforms, opening new opportunities for supporting underserved markets. DIFC’s own first-half 2026 results confirm the innovation economy’s momentum through the conflict period: active registered companies passed 10,000 for the first time, up 30% year on year, with AI, fintech and innovation firms up 39% to 1,933. Industry professionals have since ranked Dubai the world’s leading FinTech centre in the September 2026 Global Financial Centres Index (GFCI). Earlier this year DIFC announced its own commitment to become the world’s first AI-Native financial centre, embedding AI across its regulation, operations and infrastructure. The physical platform is following: the AED 100bn Zabeel District expansion will include a purpose-built AI Campus designed for 6,000 technology firms and 30,000 specialists, with the first phase due by 2029–30. Channel’s focus on the Gulf and over $1.3 billion of cumulative UAE funding since 2018 puts us in this centre of this ecosystem. In this context, we believe Channel’s technology platform positions the firm not merely as a credit provider but as a technology-enabled financial infrastructure partner for the next generation of Gulf innovation companies.

• Automated transaction monitoring across multi-jurisdiction portfolios
• AI-assisted covenant surveillance and early warning systems
• Data-driven origination scoring for fintech and digital-economy borrowers
• Valuation transparency for institutional investors provided via our Fund administrator, Altum Group.

A market backing its own confidence

Beyond credit and AI, the clearest evidence of underlying confidence in the UAE’s trajectory is the behaviour of capital allocators with multi-decade horizons. Dubai’s hotel occupancy climbed to 66% in August 2026, up from a conflict-period low of 36% in March and equivalent to 89% of the prior year’s level, as international visitor numbers continued to recover. Abu Dhabi’s occupancy held up better throughout, averaging roughly 66% in the first half of the year.

Against that backdrop, Sphere Entertainment broke ground in 2026 on the $1.7 billion, 20,000-seat Sphere Abu Dhabi on Yas Island, targeting completion in 2029, and the Walt Disney Company has publicly reaffirmed, including in shareholder communications issued during the conflict, that its plans for Disneyland Abu Dhabi, its first Middle East theme park resort, remain unchanged. These are multi-decade capital commitments made and reaffirmed during the most acute period of regional risk in a generation. They reflect the same underlying conviction that is driving DIFC and ADGM registration growth and that Channel Capital has held throughout: that the UAE’s diversification is structural and permanent.

A market backing its own confidence

Channel Capital’s Board has approved growing our GCC presence, extending the origination and portfolio monitoring capability that has underpinned its UAE lending deployment to date. This is Channel committing its own capital and people to the same thesis it presents to its investors: that Gulf private credit deserves further on-the-ground franchise, and that the local innovation economy will continue to reward managers who build durable infrastructure through cycles, such as our Sharia compliant fund; further news will be announced soon on this front.

Conclusion

The UAE innovation economy is not waiting for traditional bank credit to catch up and the incumbents cannot do it all. We are not waiting for the region’s most acute period of geopolitical risk in a generation to pass before continuing to build. Its fintech platforms are growing. Its AI companies are scaling. Its digital merchants and SMEs are generating receivables that can be structured, securitised, tokenized and returned to institutional investors as high-quality, short-duration, asset-backed profits and returns.

Channel Capital Advisors is the manager that has done this: at scale, with institutional rigour, with Sharia compliance, and with an AI-powered underwriting platform built for this specific market. Our 2025 ABS Deal of the Year award is not merely a credential. It is proof of capability that the events of 2026 have only reinforced.

We are thankful to have the support of our partners in the UAE and the Gulf to carry out this mission.

Thanks:

The authors would like to thank Michele Scataglini, Head of Corporate Innovation at DIFC, for his kind support in the production of this piece.

Sources:

Gulf News: Stargate UAE: OpenAI to build world’s largest AI data centre in Abu Dhabi (May 2025), Capera Insights, The UAE’s $250 Billion SME Funding Gap. And What’s Closing It (May 2026)

Al Jazeera and CNBC reporting on the ADNOC West-East pipeline expansion (May-July 2026); DIFC, Industry Leading Achievements in H1 2026 (July 2026); UAE Ministry of Finance / WAM, Sovereign Retail T-Sukuk Programme announcements (June-July 2026); The National / Skift / CBRE-CoStar UAE hotel occupancy data (August 2026); Semafor and The National, Sphere Abu Dhabi groundbreaking coverage (May 2026); meatechwatch.com, Stargate UAE cost update (2026).

This article has been prepared by Channel Capital Advisors LLP and Hadi Hassan for information purposes only. Channel Capital Advisors LLP is authorised and regulated by the Financial Conduct Authority. This does not constitute investment advice.