Govt accelerates reforms to unlock Pakistan’s private equity market

Pakistan is moving ahead with regulatory and tax changes intended to draw local institutional money into private equity, Mettis Global reported on October 27. Finance Minister Muhammad Aurangzeb chaired a committee meeting that reviewed the National Private Equity Framework and ways to direct funds towards commercially viable businesses and projects.

Banks, insurers, mutual funds, pension schemes, development finance institutions, corporations and family offices were identified as potential funding sources. The State Bank of Pakistan told the committee that banks can now invest up to 20% of a single private equity fund, compared with the previous 10% ceiling.

Participants also considered treating private equity funds as pass-through entities, with tax charged at investor level, and discussed clearer rules for fund structures and financial institutions. Aurangzeb asked stakeholders to settle remaining tax and regulatory matters, develop investment opportunities and advance the framework, which is intended to broaden long-term risk capital and domestic investment.