Pakistan’s Finance Minister Muhammad Aurangzeb has said he wants the country’s record $3 billion Eurobond success to translate into real investment and to attract more long-term private capital.
Aurangzeb made the remarks while chairing the second meeting of the committee formed to develop a National Private Equity Policy Framework.
The meeting followed Pakistan’s successful $3 billion dual-tranche Eurobond issuance, which saw strong and diversified participation from international investors. It was also the largest capital raise achieved by the country.
The Finance Minister said the positive response from global investors reflected growing confidence in Pakistan’s economic direction and provided an opportunity to deepen the equity side of the capital market and diversify sources of long-term financing.
He recalled that dedicated workstreams had been established after the committee’s first meeting to examine regulatory, taxation, institutional investment and other policy issues.
Aurangzeb appreciated the progress and stressed that the work should result in a practical and implementable framework capable of mobilizing actual investment while maintaining regulatory safeguards and fiscal discipline.
The committee reviewed the regulatory workstream, including measures being considered by the State Bank of Pakistan to facilitate institutional participation, investment, repatriation and exit.
The discussion also covered the accounting treatment of private equity investments and their treatment under existing banking and IFRS requirements.
Members discussed ways to create a more enabling environment for institutional investors, including banks, development finance institutions, insurance companies and pension funds, while ensuring compliance with prudential and accounting standards.
Tax Relief for Private Equity
The committee also considered tax neutrality for private equity structures, with the aim of avoiding an additional layer of taxation at the fund level while retaining taxation at the level of those ultimately earning the income.
Members reviewed existing income-distribution requirements for funds and discussed ways to facilitate genuine investment without creating opportunities for tax arbitrage or erosion of the tax base.
The tax treatment of capital gains from private-company transactions was also discussed. The committee emphasized the need to avoid unnecessarily discouraging legitimate investment and exits while maintaining safeguards against undervaluation and other forms of misuse.
Members highlighted the importance of transparent and credible valuation mechanisms, including the use of internationally recognized private equity valuation practices where appropriate.
The meeting also reviewed progress on the proposed legal and regulatory framework for private equity and venture capital, including work being carried out by the Securities and Exchange Commission of Pakistan.
The committee discussed ways to expand the domestic institutional investor base and provide greater clarity and certainty to investors and fund managers.
Aurangzeb said private equity can play an important role in bringing patient, long-term capital into businesses and productive sectors of the economy.
He said a stronger domestic private equity ecosystem could help businesses access growth capital, encourage entrepreneurship, support employment and productivity, and give investors more avenues to deploy long-term capital.
Mobilizing Real Investment
The Finance Minister stressed that the proposed framework should not merely create additional financial structures. Its objective, he said, should be to mobilize actual capital and translate it into real investment outcomes.
He also emphasized the need to build a credible domestic ecosystem capable of attracting Pakistani and international investors, developing local fund-management capacity and connecting Pakistani businesses with deeper pools of institutional capital.
The committee agreed to continue coordination among the regulatory, taxation and legal workstreams and consolidate their recommendations into a coherent national framework.
Relevant institutions were asked to continue their technical assessments and bring outstanding issues back to the committee for further consideration.
Aurangzeb called for the process to move from policy design toward implementation through a clear and sequenced approach.
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