Four weeks into the US–Iran war, surpassing the initial deadline set by US president Donald Trump, APAC dealmakers are recalibrating risk in Middle East investments and outbound deals, rather than retreating.

The tensions continue to ripple through global supply chains, commodities, currencies and risk assets, forcing investors to reprice geopolitical risk and macro volatility in the structuring and timing of M&A deals, according to APAC M&A experts.

The uncertainty follows a rebound in APAC M&A into the Middle East in 2025, after a decade-long diversification beyond energy into the technology, healthcare, and industrials sectors.

Since 2016, Greater China has led outbound M&A, with China and Hong Kong making a combined 164 transactions, followed by Japan (125), India (82), Singapore (65), South Korea (34) and others, according to Mergermarket data. The UAE, Israel and Saudi Arabia attracted the bulk of APAC investment while sanctions have obviously curtailed investment into Iran.

Legal advisers said the Iran conflict has begun to influence how transactions are structured and negotiated.

“Over the past two decades, this marks the fourth time Material Adverse Change clauses (MAC) have come into focus — after the financial crisis, Covid-19, and the Russia–Ukraine war,” said Shinoj Koshy, partner at SK Partners.

“Deals are getting done, but not on pre‑war terms. Insurance premiums have surged, and timelines are stretching. Renegotiation is more likely than walk‑aways,” he added.

“We are in an environment where geopolitics and business activity have to coexist,” said Bhavesh Shah, managing director at Equirus Capital. “Conflicts tend to cause short‑term volatility, but they rarely derail long‑term capital flows.”

What changes is pace, not intent. APAC capital into the Middle East is expected to move more carefully going forward, not disappear. One China-based outbound M&A executive put it as “The corridor is bending, not breaking.”
Source: Mergermarket, data correct as at 26-Mar-2026

APAC footprints

APAC investors completed 35 Middle East transactions valued at USD 2.3bn in 2025, up from 28 deals worth USD 763m a year earlier, according to Mergermarket data. The recovery broadly mirrors APAC’s wider outbound cycle: activity peaked in 2020-2021, cooled, and is now selectively rebuilding rather than accelerating indiscriminately.

The 2025 rebound was led less by the billion‑dollar energy megadeals that once defined the corridor and more by technology‑led investments. Technology was the most targeted sector, accounting for 13 deals valued at USD 927m, largely via venture capital rounds and minority stakes.

Healthcare, financial institutions and business services followed, though many transactions had undisclosed values.

The largest transaction in 2025 had greater strategic implications. A consortium led by Hong Kong private equity firm RRJ Management acquired an undisclosed stake in UAE-based Vista, a luxury private aviation services group, for USD 600m.

While the deal value is modest compared with earlier headline deals such as China’s USD 4.7bn acquisition of Israel-based agrochemical firm Adama Agricultural in 2016, the investment reflects the expanding APAC interest to asset‑light, cross‑border platforms including aviation and financial services beyond energy and traditional technology businesses.

That said, the corridor’s long-term contours remain anchored in energy and resources. Landmark upstream deals in Oman, including PTTEP’s USD 2.59bn acquisition of a 20% stake in Block 61 in 2021 and Medco Energi‑backed OQ Exploration & Production’s USD 1.42bn stake sale in 2023, continue to set the high‑water mark for Asian capital deployment.

Source: Mergermarket, data correct as at 26-Mar-2026

Outlook

The event has prompted a tactical pause across new cross‑border decisions, particularly among Chinese investors.

“Disruption in energy supply and industry‑chain logistics has significantly raised uncertainty,” said an executive at a Chinese insurance firm that has long co‑invested in the Middle East.

Once tensions stabilise, “UAE and Saudi Arabia are likely to be the first markets to see Asian capital return,” the executive added, especially in cloud infrastructure, clean energy and cross‑border logistics.

Deep‑pocketed Middle Eastern economies are pressing ahead with state‑led initiatives spanning smart cities, AI infrastructure, renewable energy, EV supply chains and healthcare, sectors where Asian investors, particularly from China, India, Japan and South Korea, could bring operating experience and scale.

Moreover, it is a politically friendly region, with a growing population, which will boost consumption and lower labour costs. Such combination is hard to be beaten by other blocs in the long run, noted an M&A executive at a Chinese corporate which has long-invested in the Middle East.

Likewise, the strategic investment corridor between India and the Middle East will remain strong, backed by long- term economic partnerships, sovereign capital and sectoral synergies, according to Shah at Equirus Capital.

“We may also see structural shifts in capital allocation.” While supply‑chain‑intensive and energy‑dependent sectors face pressure, interest is likely to grow in energy transition, local manufacturing, defence and technology, Shah added.

South Korea has heavily tilted to venture-style tech investments, mostly in Israel. From a dealmaking perspective, concerns centre on the Middle East’s role as a key LP base for Korean GPs, with fundraising activity at risk as several PE and VC fund formations that were in discussions are on hold, said a Seoul-based PE executive.

Inflationary pressures are squeezing corporate margins, Japanese investors said, adding the growing need to reassess investment criteria and risk thresholds, particularly around cost sensitivity and supply chain resilience. Rising oil prices have begun to disrupt operations at private equity portfolio companies, for example, a regional snack maker temporarily suspended production due to higher input costs.

According to a survey by Teikoku Databank, a 30% rise in fuel expenses from 2025 levels would add about JPY 484,000 (USD 3,030) in annual costs per company and reduce operating profit by 4.77%.

Source: Mergermarket, data correct as at 26-Mar-2026