What’s behind Oman’s USD 7.5 bn sovereign windfall

Oman’s sovereign wealth fund delivered the strongest vindication yet of Muscat’s post-2020 economic plan. The Oman Investment Authority (OIA) posted 14.6% y-o-y bottom line growth in 2025 to reach OMR 2.9 bn (c. USD 7.5 bn), riding a wave of global market rallies, strong domestic portfolio performance, and a sweeping domestic consolidation strategy.

A globally competitive return: The 2025 headline figures cap an annualized five-year return of 10.4%, placing the OIA third globally among sovereign wealth funds for overall returns on investments and first for equities returns, according to data from Global SWF. “OIA’s 2025 results are genuinely remarkable for a fund of its size and age… [It] validates the sovereign's investment capability,” Ramon Pedrosa, CEO of European Equity Research Partners, tells EnterpriseAM.

A strategy doing exactly what it was designed to do: “OIA is implementing the top economic priority of the Sultanate, which is to reduce the debt burden, Bank Nizwa Senior Head of Treasury & Global Markets and Investment Banking Muhammad Ahsan tells EnterpriseAM. “The debt reduction in 2025 is the extension of the same agenda — lower corporate debt levels to make them financially competitive and creditworthy.” Companies under the OIA umbrella have seen “efficient debt management and consolidated decision making,” he adds, with downstream benefits for banks engaging in credit discussions backed by deals that “have gone through the highest level of scrutiny by the shareholders and the government.”

Local for the win

The impressive bottom line was propped up by OIA’s domestic portfolio, which delivered OMR 1.8 bn of returns. Meanwhile, OIA’s foreign-asset-focused vehicle the Future Generations Fund brought in OMR 1.1 bn. “OIA remains more local than global with nearly two-thirds of assets invested in Oman, followed by North America at 19%, Europe at 9%, Asia-Pacific at 4% and other markets at 7%,” Daniel Brett, senior analyst at Global SWF, tells EnterpriseAM.

The local focus is a key feature of OIA’s mandate: The current breakdown of OIA’s portfolio is “typical of a strategic fund of OIA’s type in that it has a domestic core with international holdings used to provide yield, diversification, reserve growth, and dividends to the government,” Brett explains. The fund is “focused on improving state-owned enterprises’ profitability, preparing selected assets for sale, and using foreign partnerships to bring capital and expertise into Oman,” he adds.

Unpacking OIA’s strategy

While 2025 was generally a good year for equities, the blockbuster performance reflects more than that. “Oman's government previously had a fragmented asset base, with overlapping mandates and uneven commercial discipline. Consolidation has given OIA cleaner sector platforms, enabling better control of debt and cash flow. Assets are now easier to take to IPO, private placement, or strategic partnership,” Brett says.

Divestment as a lever: The OIA has generated more than OMR 2.8 bn from IPOs and private placements for some 24 companies under its portfolio since 2022. Another 30 state-owned enterprises (SOEs) are also set to see government divestment over the next five years, OIA’s President Abdulsalam al Murshidi said earlier this year.

IN CONTEXT- The OIA has led an aggressive balance sheet cleaning for SOEs since 2021 when Muscat brought these companies under the SWF’s management. The push saw OIA slash SOE debt by some USD 2.5 bn to USD 8.9 bn. It also forced these state-owned players to cut costs and implement strict commercial accounting, all the while folding many of them under one umbrella — energy players under OQ and shipping players under Asyad.

Eleven priority sectors anchor the medium-term play: “Oman’s government has announced 11 priority sectors including healthcare, tourism, mining, alternative energy, and education,” Ahsan notes. “The focus is to increase the contribution of these priority sectors to the economy. These are the sectors to focus on over the medium term.”

What’s MSX got to do with it

A pipeline that's about to be tested: Oman is heading into another round of high-profile listings, with Oman India Fertilizer Co (Omifco) and Minerals Development Oman (MDO) expected this year. Omifco’s listing “is now imminent,” Ahsan says — and despite regional jitters, “I am of the view that the deals expected this year will go through and the response to these will determine the fate of deals next year.”

OIA’s stellar results should be good news for this upcoming wave of IPOs. “IPOs and listings are a key strategic initiative covering lower government ownership, broadening of capital markets and improving the investor base, especially in the equity markets in Oman,” Ahsan says. “These listings have offered very attractive returns to attract new sources of both domestic and foreign capital, which was missing a few years ago.” For banks, the upside is concrete: “More avenues in terms of widening their credit portfolio by going to more clients and also managing equity investments actively,” he adds.

But this only works if Oman can tell the right story. “[Previous] IPOs have been well-structured, the regulatory environment has been progressively modernised,” Pedrosa says, adding that there is a “need to do more in terms of connecting Western investors and [Omani] issuers, and making sure companies receive enough coverage to be globally understood.”

The frontier market problem: “When issuers come to market individually, without a pre-existing country presence, international investors naturally apply a wider discount,” Pedrosa explains. “Not because they doubt the company, but because they’re pricing in the cost of building coverage from scratch. That's a structural feature of frontier markets. That is a fact Oman market players need to take into account.”

That’s why Muscat cannot simply rely on the OIA publishing excellent headline earnings, Pedrosa argues. Oman needs an active, coordinated effort from the whole domestic ecosystem to sell the broader investment case. “If the market and market players invest in building a coordinated, macro-driven country narrative ahead of the next wave of IPOs, that would tighten that discount, support better pricing for the state as the seller, and improve post-listing performance,” Pedrosa adds.

And Muscat has the conditions to distinguish itself among the pack: “The premise of competing on the same axis as Riyadh or Abu Dhabi is, I think, the wrong starting point,” Pedrosa tells us. “Oman doesn't need to be a smaller version of anyone. It has its own profile, and it has to grow on its own. What it lacks is a full-fledged narrative to make sure global markets understand its full value.”

A crowded GCC field competing for capital has its own pitch, too, Pedrosa says. “Investors already holding GCC weight benefit from diversification within the region, and Oman offers a different risk profile, a different sector mix, and a different geopolitical positioning,” he says. And the audience for this pitch ranges from “frontier and emerging-market specialists, yield-oriented mandates, and Asian sovereigns looking to balance their Gulf exposure.”

The benchmark is already there. Asyad listed in 2025 and OQ Exploration & Production (OQEP) made history a year earlier with Oman's largest IPO ever — drawing some USD 5.5 bn in total demand and accounting for about 11.6% of the MSX’s public market capitalization at the time. Omifco and MDO are the next test of whether Muscat can turn a run of standout deals into the sustained, country-level story that international investors will price on.