Global private equity’s nascent recovery has been stalled by a double-whammy of geopolitical conflict and technological anxiety. After 2025 closed out the year on notes of recovery and optimism, the first quarter of 2026 showed a sharp reversal in momentum.

By the numbers: Globally, 1Q 2026 buyout activity fell to USD 172 bn (down 36% q-o-q; 8% y-o-y), while exits dropped 33% q-o-q to USD 162 bn, the Financial Times reports, citing data from Dealogic. The industry is choking on a backlog of pre-2022 investments that have been difficult to exit or refinance amid high rates and geopolitical shocks. Consequently, fundraising remains dry. The USD 86 bn raised in 1Q 2026 falls just under the lackluster pace of the same period in 2025 — the sector's weakest year since 2018.

Behind the slowdown

The war in the Gulf isn’t helping: Several buyout firms paused signings altogether due to the heightened volatility from the war, with executives warning that the full economic fallout from the conflict has yet to materialise.

The biggest blow has been to the software sector: Traditionally, the safest and most lucrative wager for private equity, AI is now being approached with more caution. Investors fear that agentic AI — AI that can perform complex tasks autonomously — will cannibalize existing software business models. As such, many firms have adopted a “wait and see” approach, holding off on deploying capital into software until they can identify which companies are resilient to AI disruption.

Looking ahead

This AI reluctance could skew gains toward the few: BlackRock CEO Larry Fink’s latest annual letter argued that the companies best positioned to use AI — those with the right data, infrastructure, and capital — will reap most of the benefits, leaving others behind and deepening the wealth gap between those that can invest in the technology and those that want to but lack the resources.

Our take: The steady revenue models that drove SaaS buyout over the past few years are now being called into question as AI starts to challenge traditional software pricing. That uncertainty is creating gaps in the market — gaps that well-capitalized GCC investors are well placed to step into, particularly as they look to rebound from the impact of the regional conflict.

MARKETS THIS MORNING-

Asian markets are mostly up in early trading this morning, with Japan’s Nikkei the only exception, having erased earlier gains and trading 0.3% lower. US stock futures are down as well after US President Donald Trump set an 8pm EST deadline for the US and Iran to reach a deal.

ADX

9,625

+0.3% (YTD: -3.7%)

DFM

5,448

-0.7% (YTD: -9.9%)

Nasdaq Dubai UAE20

4,523

+0.0% (YTD: -7.5%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

3.6% o/n

3.7% 1 yr

TASI

11,263

-0.1% (YTD: +7.4%)

EGX30

47,652

+0.8% (YTD: +13.9%)

S&P 500

6,612

+0.4% (YTD: -3.4%)

FTSE 100

10,436

+0.7% (YTD: +5.1%)

Euro Stoxx 50

5,693

-0.7% (YTD: -1.7%)

Brent crude

USD 109.77

+0.7%

Natural gas (Nymex)

USD 2.81

-0.1%

Gold

USD 4,685

0.0%

BTC

USD 68,655

-0.5% (YTD: -21.7%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.58

-2.2% (YTD: -4.5%)

S&P MENA Bond & Sukuk

149.14

-0.3% (YTD: -1.8%)

VIX (Volatility Index)

24.17

+1.3% (YTD: +61.6%)

THE CLOSING BELL-

The DFM fell 0.7% yesterday on turnover of AED 660.1 mn. The index is down 9.9% YTD.

In the green: Amlak Finance (+2.3%), Union Properties (+1.8%), and Aramex (+1.9%).

In the red: National Cement Company (-4.9%), Agility the Public Warehousing Company (-4.7%), and Commercial Bank of Dubai (-4.3%).

Over on the ADX, the index rose 0.3% on turnover of AED 817 mn. Meanwhile, Nasdaq Dubai was nearly flat.

Corporate Actions

Adnoc Gas shareholders approved a final USD 896 mn dividend for 4Q 2025, bringing its total dividends for the year to USD 3.6 bn, marking a 5% increase y-o-y and its biggest dividend on record, according to a press release (pdf).

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