ISLAMABAD, Aug 19: The Securities and Exchange Commission of Pakistan (SECP) has approved the regulatory framework for the registration and control of the Real Estate Investment Trusts (REITs) and Private Equity and Venture Capital Funds (PE&VCF).

The commission on Tuesday said it continuously strived to offer financial products to the investors, which were tailored to suit the prevailing market conditions and various segments according to their risk appetite.

After the REITs, another development in this regard was the introduction of the PE&VCF. The approved regulations are the result of a comprehensive consultative process that started about two years back and includes extensive market dialogue with domestic as well as international stakeholders. _

Private equity can play a vital role in transformation of the local economy by providing growth capital to the local corporate sector, particularly the SME sector, besides patronising entrepreneurship and fuelling the privatisation process.

Private equity will unlock the hidden value of the private companies by providing capital and managerial skills for growth and expansion.

To foster the growth of these investment vehicles in Pakistan significant incentives have already been provided by the federal government on the fiscal side in the Finance Act 2008. These include tax-free status for the fund up to 2014. Reduced capital gains tax rate of 10 per cent as against 35 per cent on sale of assets and shares of a private company to a PE&VC Fund.

It is expected that the conducive regulatory framework combined with the tax incentives provided by the government for PE&VCF will attract large amounts of foreign direct investment in the country.

The PE&VCF will be an unlisted closed-end unit-trust fund open only to high net worth individuals and institutions. The fund will provide equity for seed/start-up capital, expansion, buyouts as well as turn around although primarily to private companies. However, it can venture into privatisation deals as well.

The management company or