Govt accelerates reforms to unlock Pakistan’s private equity market

October 27, 2026 (MLN): Pakistan is advancing regulatory and taxation reforms to channel domestic institutional funds into private equity, with the government prioritizing local capital mobilization and viable investment opportunities to establish a functioning private equity market.

The progress was reviewed at the third meeting of the Committee on the National Private Equity Framework, chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, where participants discussed regulatory changes, proposed tax arrangements and mechanisms to facilitate investment in commercially viable businesses and projects.

The Committee identified banks, insurance companies, mutual funds, pension schemes and development finance institutions as potential sources of domestic institutional capital. Local corporations and family offices were also discussed as prospective investors in private equity funds.

The discussions highlighted opportunities arising from acquisitions, business consolidation, new projects and exits by existing investors.

Participants also examined the potential to develop a substantial pipeline of investable opportunities over the next five to ten years by directing available domestic liquidity towards productive economic activities.

Muhammad Aurangzeb stressed that mobilizing domestic capital should take precedence in establishing a credible private equity market, creating a foundation for attracting foreign institutional investors and enabling international co-investment in the future.

On the regulatory front, the State Bank of Pakistan (SBP) briefed the Committee on recent changes, including an increase in the permissible investment limit for banks in a single private equity fund from 10% to 20%.

The Committee also reviewed measures relating to fund structures, transparency, investment arrangements and the participation of financial institutions in private equity funds.

Taxation reforms formed another key part of the discussions, with participants examining proposals to treat private equity funds as pass-through vehicles, under which taxation would apply at the investor level.

The Finance Minister called for a comprehensive assessment of international taxation models to develop a competitive and predictable framework suited to Pakistan’s economic and regulatory environment.

He emphasized that the proposed arrangements should facilitate legitimate investment while preventing tax arbitrage, unintended distortions and regulatory inconsistencies.

The Committee further stressed the importance of coordination among regulatory and taxation authorities to ensure consistent treatment of different investment vehicles and support the development of the private equity market.

Muhammad Aurangzeb directed the relevant stakeholders to resolve outstanding regulatory and taxation issues, strengthen efforts to mobilise domestic capital and identify viable investment opportunities to advance the National Private Equity Framework towards implementation.

He also highlighted the potential contribution of a developed private equity ecosystem to deeper domestic capital markets, improved access to long-term risk capital, increased private-sector investment and sustainable economic growth.

The meeting was attended by the Adviser to the Prime Minister on Privatization, the Secretary Finance, the Chairman of the Federal Board of Revenue (FBR), and other Committee members representing relevant public- and private-sector institutions.

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