Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, chaired the second meeting of the Committee constituted to develop a National Private Equity Policy Framework, aimed at strengthening Pakistan’s private equity ecosystem and facilitating greater mobilization of domestic and international long-term capital for productive investment.
At the outset, the Committee congratulated the Finance Minister on Pakistan’s successful US$3 billion dual-tranche Eurobond issuance and noted the strong and diversified participation of international investors. The Finance Minister observed that the positive response from global capital markets reflected growing confidence in Pakistan’s economic direction and provided an encouraging backdrop for efforts to deepen the equity side of the capital market and broaden the country’s sources of long-term financing.
The Finance Minister recalled that dedicated work streams had been established following the Committee’s first meeting to advance work across regulatory, taxation, institutional investment and other policy areas. He appreciated the progress made and emphasized that the objective should be to translate these work streams into a coherent, practical and implementable framework capable of mobilizing actual investment, while maintaining appropriate regulatory safeguards and fiscal discipline.
The Committee reviewed progress on the regulatory work stream, including measures being considered by the State Bank of Pakistan to facilitate institutional participation, investment, repatriation and exit, as well as appropriate accounting treatment for private equity investments. The discussion also covered the treatment of such investments under existing banking and IFRS requirements, with emphasis on creating an enabling environment for institutional investors, including banks, Development Finance Institutions, insurance companies and pension funds, while ensuring compliance with applicable prudential and accounting standards.
The Committee discussed the principle of tax neutrality for private equity structures, with the objective of ensuring that the pooling structure itself does not create an additional layer of taxation while preserving taxation at the level of those ultimately earning the income. Members considered the existing income-distribution requirements applicable to funds and examined ways to facilitate genuine investment without creating opportunities for tax arbitrage or erosion of the tax base. Appropriate disclosure, registration and anti-avoidance safeguards were emphasized as integral to the proposed framework.
The Committee also considered the tax treatment of capital gains in private-company transactions. Members noted the importance of developing a framework that does not unnecessarily discourage legitimate investment and exits, while maintaining appropriate guardrails against undervaluation and other potential misuse. The discussion highlighted the need for transparent, credible and reliable valuation mechanisms, drawing, where appropriate, on internationally recognized private equity valuation practices.
The meeting further reviewed progress on the proposed legal and regulatory framework for private equity and venture capital, including ongoing work by the Securities and Exchange Commission of Pakistan. The Committee discussed ways to broaden the domestic institutional investor base and develop a regulatory architecture that provides greater clarity and certainty to investors and fund managers.
Senator Muhammad Aurangzeb emphasized that private equity represents an important asset class for mobilizing patient, long-term capital into businesses and productive sectors of the economy. A stronger domestic private equity ecosystem, he noted, can help businesses access growth capital, strengthen domestic investment and entrepreneurship, support employment and productivity, and provide investors with additional avenues for deploying long-term capital.
The Finance Minister stressed that the framework should be designed not merely to create additional financial structures, but to mobilize actual capital and translate it into investment outcomes. He emphasized the need to develop a credible domestic ecosystem capable of attracting both Pakistani and international investors, building local fund-management capacity and progressively connecting Pakistan’s businesses and investment opportunities with deeper pools of institutional capital.
The Committee agreed that the regulatory, taxation and legal work streams should continue to coordinate closely and consolidate their recommendations into a coherent national framework. Relevant institutions were asked to take forward their respective assessments and technical work so that outstanding issues could be progressively resolved and recommendations brought back to the Committee for further consideration.
The Finance Minister emphasized the need to maintain momentum and move from policy design towards implementation through a clear and sequenced approach. He underscored that the ultimate objective was to establish a competitive, transparent and well-regulated private equity environment that could broaden Pakistan’s financing landscape, complement traditional bank and capital-market financing, and channel more long-term capital towards productive economic activity.
The meeting concluded with broad agreement to take forward the priority recommendations and continue work towards an overall National Private Equity Policy Framework, incorporating appropriate safeguards against misuse and arbitrage while creating the conditions necessary for the sustainable growth of Pakistan’s private equity market.
The meeting was attended by Advisor to the Prime Minister for Industries and Production, Mr. Haroon Akhtar Khan; Advisor to the Prime Minister on Privatisation, Mr. Muhammad Ali; Minister of State for Finance, Mr. Bilal Azhar Kayani; Secretary Finance, Mr. Imdad Ullah Bosal; along with other members of the Committee from the relevant public and private sectors.
