Islamabad August 3 2022: The Security and Exchange Commission of Pakistan (SECP) Wednesday released a Diagnostic Review of Pakistan’s Private Funds Industry, providing a holistic synopsis and recommendations for key fiscal and regulatory reforms required for a vibrant PF industry that can spur economic activity, catalyze job creation and increase government revenues.
The report provides an overall assessment of the country’s Private Funds (PF) sector, which collectively refer to both Private Equity and Venture Capital Funds (PE&VC Funds) and Alternative Funds, said a press release issued here.
To enable a vibrant and galvanized PF sector, the report also provides policy recommendations for a multifaceted reform agenda.
Apart from properly defining private funds in the tax laws and enabling all private fund categories to avail pass-through status and capital gains tax exemptions, the report provides some basic steps that can augment the investor pool and unify government initiatives for the sector.
The report states the total size of Private Equity and Venture Capital Funds as on June 30, 2022 reached PKR 10.99 billion as compared to PKR 6.69 billion on June 30, 2021, registering a year on year growth of 64%. However, the number of PE&VC funds remained the same at five.
On the operational side, the study answers pertinent questions enabling launch of private funds in the alternate legal structure of Limited Liability Partnership as compared to the long prevailing trust structure. It also recommends a relook into the role of trustee and custodian, considering that these funds target only sophisticated investors and institutions.
The SECP Chairman Aamir Khan, in his statement attached to the report said that considering more than 60% of population comprises of youth in Pakistan and to encourage innovation and knowledge-based ideas into commercial production, the potential of PF industry requires to be practically tapped and fully explored.
The diagnostic review report is an outcome of extensive consultations with private fund management companies, key players of the start-up space and a diverse set of both public and private stakeholders.
