What mistakes do foreign investors commonly make when entering the Gulf market for the first time?
Foreign investors entering the Gulf consistently underestimate layers of complexity that standard due diligence simply does not surface. The most significant blind spots are the limited bandwidth of management teams that have never operated under institutional scrutiny, and the concentration risk embedded in revenue streams heavily tied to government contracts or sovereign entities — a dynamic that some investors read as risk and others treat as a form of security. Above all, Faraj is unambiguous: strategies that work in developed markets cannot be transplanted wholesale to the Middle East. Investors must be active, hands-on, and genuinely culturally informed — or they will fail.
The governance gap is particularly acute. Many Gulf businesses are privately held, with CEOs who have historically reported only to themselves and to family members on the board. When an international investor arrives with new expectations, the collision can be abrupt. The business may be performing well by every metric visible from the outside — and yet the institutional demands of a new investor relationship can overwhelm a management team that has never faced them. This is a form of operational risk that rarely appears in a financial model, and one that Faraj identifies as a recurring entry mistake.
"This is a private business where CEOs never had to answer to anybody but himself and his family members who sit on the board. And all of a sudden, you have an international investor who says, I love what you've done with the business, but these are my ideas."
— Eyad Faraj, Partner, Transaction and Investor Services Practice, Roland BergerThe macro context adds further complexity. Over the last ten to fifteen years, Gulf capital deployment shifted from hydrocarbon-focused public sector spend toward domestic economic diversification — with non-oil GDP as the new benchmark. More recently, the last twelve to twenty-four months have seen countries like Saudi Arabia pivot from deploying capital to harvesting returns from investments already in the ground. Foreign investors arriving today are entering a market mid-transformation, one where sovereign vehicles like the PIF played the dominant role in the first eight to ten years of domestic investment precisely to de-risk the environment before foreign capital was invited in. Understanding where a given market sits in that cycle is not optional — it is foundational. You can explore the full episode on Listenly's Beyond the Deck page.
About Eyad Faraj
Eyad Faraj is a partner at Roland Berger, embedded within the firm's transaction and investor services practice. He is based in Bahrain and works across the GCC, which gives him direct, day-to-day exposure to the specific dynamics of Gulf deal-making rather than an observer's perspective from outside the region. His career spans capital markets, investment banking, and strategy consulting — a combination that is relatively rare and that allows him to engage with Gulf investment questions from both the transactional and the strategic angle simultaneously. He is originally from Bahrain and has worked both inside and outside the region, a dual experience that directly informs his analysis of where international investor assumptions break down when they meet Gulf market realities. His expertise covers the full investment cycle in the Gulf, from entry due diligence and governance structuring through to value creation and exit — the breadth that makes his warnings about first-time investor mistakes particularly grounded.
See also
Governance is the first and most critical layer international investors must assess before committing capital in the Gulf. Many target companies are private, and investors must carefully evaluate governance structures before committing capital.
The IPO market in the Gulf is emerging as a viable and increasingly important exit route, complementing traditional trade sales or strategic sales. Key exchanges like TADAWUL and ADX are playing a central role in this shift.
Yes — as Eyad Faraj states directly, "the region has moved from just being a distributor of capital to also attracting it." International investors are increasingly looking at the Gulf as a destination, not just a source, of capital.