ISLAMABAD (Dunya News) — Pakistan plans to finalise a new private equity policy framework within the next two weeks, aiming to attract between $10 billion and $15 billion in investment from domestic and international investors, according to a report published by Dawn on Tuesday.
The proposed framework is intended to strengthen Pakistan’s private equity market by improving regulations, reforming taxation and creating a more predictable environment for investors. Policy measures requiring legislation are expected to be incorporated into the Finance Bill for fiscal year 2027-28, while regulatory changes could begin immediately after the framework is finalised.
The initiative was discussed at a meeting of the prime minister’s committee on developing the National Private Equity Framework, attended by Finance Minister Muhammad Aurangzeb.
The committee reviewed progress on regulatory and tax reforms, the mobilisation of domestic capital and the identification of commercially viable investment opportunities.
Officials also examined the potential for private equity investment through business acquisitions, corporate consolidation, new projects and exits by existing investors.
Domestic capital to take priority
Aurangzeb emphasised that mobilising domestic savings should be the immediate priority, providing a foundation for attracting foreign institutional investors and facilitating international co-investment.
The committee considered how capital held by banks, insurance companies, mutual funds, pension schemes and development finance institutions could be channelled into private equity funds and viable businesses. Local corporations and family offices were also identified as potential sources of investment.
The finance minister stressed the need for a transparent, commercially viable and investor-friendly framework that could encourage private-sector investment and support sustainable economic growth.
Participants discussed international models, including those used in the United Kingdom, the Middle East and India, which were cited during the meeting as examples of markets that have attracted substantial private equity investment.
The government aims to adapt relevant practices to Pakistan’s economic and regulatory conditions rather than simply replicate foreign arrangements.
Regulatory reforms under consideration
The State Bank of Pakistan briefed the committee on recent regulatory changes, including an increase in the permissible investment limit for banks in a single private equity fund from 10 per cent to 20 per cent.
Participants also highlighted the growth of banks’ exposure to real estate investment trusts (REITs), which reportedly increased from Rs22 billion in 2021 to more than Rs280 billion.
The experience was cited as evidence of the potential for regulatory changes to encourage investment in alternative asset classes.
The committee also examined proposed changes to fund structures, investment arrangements and transparency requirements, alongside measures to facilitate financial institutions’ participation in private equity funds.
Tax framework aims to attract investors
Tax reform is another central component of the proposed policy.
The committee considered recommendations to treat private equity funds as pass-through vehicles, under which taxation would generally be applied at the investor level rather than the fund level.
The proposal is intended to provide greater clarity and predictability for investors while making Pakistan’s private equity market more competitive internationally.
Aurangzeb directed officials to assess international taxation models and adapt suitable approaches to Pakistan’s needs. He stressed that any new arrangements should facilitate legitimate investment while preventing tax arbitrage, unintended distortions and inconsistencies between regulatory frameworks.
The committee called for coordination among relevant regulatory and taxation authorities to ensure consistent treatment of different investment vehicles.
Investment opportunities across key sectors
The framework is expected to support the development of investment opportunities across sectors including minerals, real estate, agriculture, oil and gas, tourism and manufacturing.
Officials also discussed building a pipeline of investable projects over the next five to 10 years, using domestic liquidity to finance productive economic activity.
Foreign investors and institutional funds have often sought clear rules governing investment entry, ownership and exit before committing capital to Pakistan, according to sources cited in the report.
Aurangzeb welcomed progress on the framework and directed stakeholders to resolve outstanding regulatory and taxation issues, identify commercially viable projects and advance preparations for implementation.
The government expects the initiative to deepen domestic capital markets, improve access to long-term risk capital and encourage private-sector-led growth. However, the proposed $10 billion to $15 billion investment target remains an ambition; actual inflows will depend on the framework’s implementation and investor response.