Pakistan has accelerated efforts to develop a National Private Equity Policy Framework aimed at strengthening the country’s private equity ecosystem and attracting greater domestic and international long term capital for productive investment. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired the second meeting of the committee tasked with developing the framework, reviewing progress on regulatory, taxation, institutional investment, and legal work streams.
The committee also congratulated the Finance Minister on Pakistan’s successful three billion dollar dual tranche Eurobond issuance, noting strong and diversified participation from international investors. Aurangzeb said the positive response from global capital markets reflected growing confidence in Pakistan’s economic direction and created an encouraging environment for deepening the equity side of the capital market.
The committee reviewed measures being considered by the State Bank of Pakistan to facilitate institutional participation in private equity, including investment, repatriation, and exit mechanisms, alongside discussions on the accounting treatment of private equity investments under existing banking and IFRS requirements. Members emphasised the importance of creating an enabling environment for institutional investors, including banks, Development Finance Institutions, insurance companies, and pension funds, while maintaining compliance with prudential and accounting standards.
Discussions also covered tax neutrality for private equity structures to ensure the pooling structure does not result in an additional layer of taxation, while taxation remains applicable at the level of those ultimately earning the income. The committee examined existing income distribution requirements for funds, alongside measures to facilitate genuine investment while preventing tax arbitrage and erosion of the tax base, stressing the importance of appropriate disclosure, registration, and anti-avoidance safeguards. Tax treatment of capital gains arising from private company transactions also came under discussion, with members emphasising the need for transparent and reliable valuation mechanisms drawing on internationally recognised private equity valuation practices.
Aurangzeb termed private equity an important asset class for channeling patient, long term capital into businesses and productive sectors, noting that a stronger domestic private equity market could help businesses secure growth capital, encourage investment and entrepreneurship, support employment and productivity, and provide investors with additional avenues for deploying long term funds. He stressed the need to maintain momentum and move from policy formulation toward implementation through a clear and sequenced approach, with the ultimate goal of establishing a competitive, transparent, and well regulated private equity environment that could diversify Pakistan’s financing landscape. The meeting was attended by Advisor to the Prime Minister for Industries and Production Haroon Akhtar Khan, Advisor to the Prime Minister on Privatisation Muhammad Ali, Minister of State for Finance Bilal Azhar Kayani, Secretary Finance Imdad Ullah Bosal, and other committee members from the public and private sectors.
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