Key Takeaways
- The government is set to roll out a new private equity policy framework targeting $10 to $15 billion in investments.
- The framework is based on models from the UK, the Middle East, and India, which have attracted significant investments.
- The policy aims to enhance regulatory and tax reforms to support a robust private equity ecosystem in Pakistan.
The government of Pakistan is preparing to launch a new private equity policy framework, aiming to attract $10 to $15 billion in tax-neutral investments from both domestic and international players. This framework, based on successful models from the United Kingdom, the Middle East, and India, is expected to significantly boost the private equity market in the country.
According to an official, the policy framework is expected to be finalised within the next two weeks, with immediate regulatory actions to be introduced through the finance bill for the next fiscal year (FY27-28).
The meeting of the prime minister’s committee for developing the National Private Equity Framework reviewed progress on regulatory and tax reforms, domestic capital mobilisation, and the development of investment opportunities. The committee also discussed the potential of Pakistan’s private equity market, including opportunities arising from acquisitions, business consolidation, new projects, and exits by existing investors.
The introduction of regulatory changes for banks has increased the portfolio from Rs22bn in 2021 to over Rs280bn now, a participant said. This increase highlights the potential for private equity investments, provided a conducive environment is created.
The meeting also focused on the mobilisation of domestic institutional capital, including resources available with banks, insurance companies, mutual funds, pension schemes, and development finance institutions. Local corporations and family offices were also discussed as potential participants.
Informed sources stated that foreign investors and institutional funds, particularly those from friendly nations, always seek a proper policy framework with rules-based exit and entry facilitations to secure their investments. This underscores the importance of a transparent and investor-friendly framework.
The committee discussed various investment structures and mechanisms to facilitate the deployment of these resources into private equity funds and commercially viable businesses and projects. The prospects of developing a substantial pipeline of investable opportunities over the next five to 10 years were also reviewed.
Finance Minister Muhammad Aurangzeb appreciated the progress achieved across key workstreams and underscored the importance of translating regulatory and policy reforms into practical investment opportunities. He emphasised the need for a transparent, commercially viable, and investor-friendly framework that would help mobilise domestic savings, attract institutional investment, and support private-sector-led economic growth.
Moreover, he noted that mobilising domestic capital should be the immediate priority, providing the foundation for a credible and functioning private equity market capable of subsequently attracting foreign institutional investors and facilitating international co-investment.
