Pakistan’s federal government plans to introduce a national private equity framework within two weeks to attract between $10 billion and $15 billion in domestic and foreign investment, according to a report by Dawn. The proposed policy aims to improve access to long-term risk capital and establish a more predictable investment environment.
The framework was discussed at a recent meeting of the Prime Minister’s Committee on the National Private Equity Framework, chaired by Finance Minister Muhammad Aurangzeb. Drawing on models from the United Kingdom, the Middle East, and India, the policy seeks to improve rules governing investments, fund management, and investor exits.
Officials said regulatory reforms would be introduced immediately after the framework is finalised, while proposed tax measures would be included in the Finance Bill for fiscal year 2027-28. The committee also explored ways to mobilise investment from banks, insurance companies, mutual funds, pension schemes, development finance institutions, corporations, and family offices.
The State Bank of Pakistan briefed participants on proposed regulatory changes, including raising the permissible investment limit for banks in a single private equity fund from 10% to 20%. The meeting also reviewed the growth of real estate investment trusts (REITs), whose portfolio increased from Rs22 billion in 2021 to more than Rs280 billion following regulatory changes.
On taxation, the committee considered treating private equity funds as pass-through investment vehicles, meaning taxes would be imposed at the investor level rather than the fund level. Aurangzeb directed officials to examine international tax models and ensure incentives encourage genuine investment without creating opportunities for tax avoidance or regulatory inconsistencies.
The government has prioritised mobilising domestic institutional capital to establish a credible private equity market before attracting more foreign investors. The proposed framework is also expected to develop investment opportunities through acquisitions, business consolidation, new projects, and exits by existing investors over the next five to 10 years.
