Key Takeaways
- • Pakistan's government is advancing regulatory and tax reforms to channel domestic institutional capital into private equity, per a report dated October 27, 2026 by Mettis Link News (MLN).
- • The State Bank of Pakistan told the committee it has raised the permissible investment limit for banks in a single private equity fund from 10% to 20%.
- • The Committee on the National Private Equity Framework, chaired by Finance Minister Senator Muhammad Aurangzeb, identified banks, insurers, mutual funds, pension schemes, and development finance institutions as potential domestic sources of capital.
- • Authorities are examining treating private equity funds as pass-through vehicles so tax applies at the investor level, with a call for a comparison of international taxation models.
- • Aurangzeb said mobilizing domestic capital should come first, creating a base for attracting foreign institutional investors and international co-investment later.
Summary
Pakistan is moving forward with regulatory and taxation reforms intended to channel domestic institutional funds into private equity, with the government prioritizing local capital mobilization and the creation of viable investment opportunities. The progress was reviewed at the third meeting of the Committee on the National Private Equity Framework, chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, according to Mettis Link News (MLN).
The Committee identified banks, insurance companies, mutual funds, pension schemes and development finance institutions as potential sources of domestic institutional capital, and discussed local corporations and family offices as prospective investors in private equity funds. Discussions highlighted deal flow arising from acquisitions, business consolidation, new projects and exits by existing investors. Participants also examined building a substantial pipeline of investable opportunities over the next five to ten years by directing domestic liquidity toward productive economic activity.
On the regulatory side, the State Bank of Pakistan (SBP) briefed the Committee on recent changes, including an increase in the permissible investment limit for banks in a single private equity fund from 10% to 20%. The Committee also reviewed fund structures, transparency, investment arrangements and the participation of financial institutions in private equity funds.
Taxation was another central topic. Participants examined proposals to treat private equity funds as pass-through vehicles, with taxation applying at the investor level. Aurangzeb called for a comprehensive assessment of international taxation models to build a competitive and predictable framework, stressing that arrangements should facilitate legitimate investment while preventing tax arbitrage, unintended distortions and regulatory inconsistencies. The Committee also stressed coordination among regulatory and taxation authorities.
Aurangzeb directed stakeholders to resolve outstanding regulatory and tax issues, strengthen domestic capital mobilization and identify viable investment opportunities to advance the National Private Equity Framework toward implementation. He highlighted the potential benefits of a developed private equity ecosystem, including deeper domestic capital markets, improved access to long-term risk capital, increased private-sector investment and sustainable growth. The meeting was attended by the Adviser to the Prime Minister on Privatization, the Secretary Finance, the Chairman of the Federal Board of Revenue (FBR), and other committee members from public and private institutions.
The Committee identified banks, insurance companies, mutual funds, pension schemes and development finance institutions as potential sources of domestic institutional capital, and discussed local corporations and family offices as prospective investors in private equity funds. Discussions highlighted deal flow arising from acquisitions, business consolidation, new projects and exits by existing investors. Participants also examined building a substantial pipeline of investable opportunities over the next five to ten years by directing domestic liquidity toward productive economic activity.
On the regulatory side, the State Bank of Pakistan (SBP) briefed the Committee on recent changes, including an increase in the permissible investment limit for banks in a single private equity fund from 10% to 20%. The Committee also reviewed fund structures, transparency, investment arrangements and the participation of financial institutions in private equity funds.
Taxation was another central topic. Participants examined proposals to treat private equity funds as pass-through vehicles, with taxation applying at the investor level. Aurangzeb called for a comprehensive assessment of international taxation models to build a competitive and predictable framework, stressing that arrangements should facilitate legitimate investment while preventing tax arbitrage, unintended distortions and regulatory inconsistencies. The Committee also stressed coordination among regulatory and taxation authorities.
Aurangzeb directed stakeholders to resolve outstanding regulatory and tax issues, strengthen domestic capital mobilization and identify viable investment opportunities to advance the National Private Equity Framework toward implementation. He highlighted the potential benefits of a developed private equity ecosystem, including deeper domestic capital markets, improved access to long-term risk capital, increased private-sector investment and sustainable growth. The meeting was attended by the Adviser to the Prime Minister on Privatization, the Secretary Finance, the Chairman of the Federal Board of Revenue (FBR), and other committee members from public and private institutions.
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