Key Takeaways
- • Pakistan is preparing a National Private Equity Framework targeting $10 billion to $15 billion in tax-neutral investment from local and international investors.
- • The framework is expected to be completed within two weeks, with legislative measures likely folded into the Finance Bill for fiscal year 2027-28, while regulatory measures could take effect immediately after finalisation.
- • The State Bank of Pakistan is raising the permissible bank investment in a single private equity fund from 10% to 20%.
- • Tax proposals would treat private equity funds as pass-through vehicles, with taxation applied at the investor level.
- • Finance Minister Muhammad Aurangzeb directed authorities to prioritise domestic capital mobilisation before attracting foreign institutional and co-investment.
Summary
The government is preparing a National Private Equity Framework designed to strengthen Pakistan's private equity market and attract between $10 billion and $15 billion in tax-neutral investment from local and international investors. The framework is expected to be completed within two weeks. Policy measures requiring legislative changes are likely to be incorporated into the Finance Bill for fiscal year 2027-28, while regulatory measures could be implemented immediately after finalisation.
The plan was discussed at a meeting of the Prime Minister's Committee for Developing the National Private Equity Framework, attended by Finance Minister Muhammad Aurangzeb. The committee reviewed regulatory and tax reforms, domestic capital mobilisation, and ways to build a pipeline of viable investment opportunities. International models from the United Kingdom, the Middle East and India were examined, markets that the article says have attracted an estimated $100 billion to $150 billion through private equity.
Participants identified acquisitions, business consolidation, new projects and investor exits as potential growth areas. The committee cited the growth of bank investment in REITs as an example of how regulatory changes can expand institutional participation, with that portfolio rising from Rs22 billion in 2021 to more than Rs280 billion. The committee also assessed capital available through banks, insurers, mutual funds, pension schemes, development finance institutions, corporations and family offices, and considered mechanisms for directing these funds toward private equity funds and commercially viable projects.
The State Bank of Pakistan briefed participants on regulatory changes, including raising the permissible investment by a bank in a single private equity fund from 10% to 20%. On tax, proposals include treating private equity funds as pass-through vehicles with taxation applied at the investor level. Aurangzeb called for international tax practices to be assessed before adaptation to Pakistan, while ensuring the framework prevents tax arbitrage and regulatory distortions.
Officials noted that international investors generally seek predictable rules governing capital entry and exit, and that such arrangements could support investment in minerals, real estate, agriculture, oil and gas, tourism and manufacturing. Aurangzeb said domestic capital mobilisation should be prioritised initially, with a stronger local market subsequently helping attract foreign institutional investors and international co-investment. He directed relevant authorities to resolve outstanding regulatory and tax matters, coordinate their approaches and identify viable investment opportunities as the framework moves toward implementation.
The plan was discussed at a meeting of the Prime Minister's Committee for Developing the National Private Equity Framework, attended by Finance Minister Muhammad Aurangzeb. The committee reviewed regulatory and tax reforms, domestic capital mobilisation, and ways to build a pipeline of viable investment opportunities. International models from the United Kingdom, the Middle East and India were examined, markets that the article says have attracted an estimated $100 billion to $150 billion through private equity.
Participants identified acquisitions, business consolidation, new projects and investor exits as potential growth areas. The committee cited the growth of bank investment in REITs as an example of how regulatory changes can expand institutional participation, with that portfolio rising from Rs22 billion in 2021 to more than Rs280 billion. The committee also assessed capital available through banks, insurers, mutual funds, pension schemes, development finance institutions, corporations and family offices, and considered mechanisms for directing these funds toward private equity funds and commercially viable projects.
The State Bank of Pakistan briefed participants on regulatory changes, including raising the permissible investment by a bank in a single private equity fund from 10% to 20%. On tax, proposals include treating private equity funds as pass-through vehicles with taxation applied at the investor level. Aurangzeb called for international tax practices to be assessed before adaptation to Pakistan, while ensuring the framework prevents tax arbitrage and regulatory distortions.
Officials noted that international investors generally seek predictable rules governing capital entry and exit, and that such arrangements could support investment in minerals, real estate, agriculture, oil and gas, tourism and manufacturing. Aurangzeb said domestic capital mobilisation should be prioritised initially, with a stronger local market subsequently helping attract foreign institutional investors and international co-investment. He directed relevant authorities to resolve outstanding regulatory and tax matters, coordinate their approaches and identify viable investment opportunities as the framework moves toward implementation.
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