Pakistan plans private equity framework to attract $10-15 billion

The government is preparing a new private equity policy framework that aims to bring in $10 billion to $15 billion of tax-neutral investment from domestic and international investors, according to Daily Times and ProPakistani.

The government wants to finalise the framework within the next two weeks. Policy actions would be introduced through the finance bill for fiscal year 2027-28, but an official said regulatory steps would follow immediately after finalisation, without waiting for the next budget.

The framework draws on models in the United Kingdom, the Middle East and India, which are estimated to have attracted $100 billion to $150 billion. This was presented to Finance Minister Muhammad Aurangzeb at a meeting of the prime minister's committee developing the National Private Equity Framework.

The meeting reviewed regulatory and tax reforms, domestic capital mobilisation and ways to build a stronger private equity market. Participants also looked at investment potential from acquisitions, business consolidation, new projects and exits by existing investors.

The committee discussed channelling money held by banks, insurance companies, mutual funds, pension schemes and development finance institutions into private equity. Local corporations and family offices were named as other possible sources. One participant said that allowing banks to raise their exposure to real estate investment trusts helped grow that sector's portfolio from Rs22 billion in 2021 to more than Rs280 billion.

Officials said foreign investors and institutional funds, particularly from friendly countries, usually want a clear policy with predictable entry and exit rules before committing capital. This matters when Pakistani delegations present opportunities in minerals, real estate, agriculture, oil and gas, tourism and manufacturing.

The State Bank of Pakistan told the meeting it had raised the limit for a bank's investment in a single private equity fund from 10 percent to 20 percent. On tax, proposals included treating private equity funds as pass-through vehicles, with tax applied at the investor level.

Aurangzeb asked for international tax models to be assessed and adapted to Pakistan's conditions, so that arrangements support legitimate investment while preventing tax arbitrage and unintended distortions. He said mobilising domestic capital should be the immediate priority, ahead of foreign institutional investors and co-investment, and directed stakeholders to resolve outstanding regulatory and tax issues and move the framework toward implementation.