The Securities and Exchange Commission of Pakistan (SECP) has introduced infrastructure funds to address the country’s $15 billion annual financing gap. By creating a dedicated category of mutual funds, the regulator aims to mobilize long-term domestic savings for projects that can transform Pakistan’s energy, transport, housing, and social sectors.
A New Path for Investment
SECP announced the launch of Infrastructure Schemes under the framework of open-end collective investment schemes. This initiative represents a major step toward aligning capital markets with national development priorities.
The move follows extensive consultations with the Mutual Funds Association of Pakistan (MUFAP) and other stakeholders. First discussed at the Mutual Fund Focus Group Session earlier this year, the framework has now been finalized to ensure regulatory clarity, investor protection, and structured opportunities for both institutional and retail investors.
The Financing Challenge
Pakistan requires nearly $15 billion every year to meet its infrastructure needs. Yet, current spending remains just 2.1% of GDP. This figure falls far short of the global benchmark of 8-10% that most countries allocate to infrastructure development.
SECP’s initiative is designed to close this gap by offering investors transparent access to infrastructure projects while strengthening long-term financing mechanisms.
Market Perspective
“This is a transformative step for Pakistan’s capital markets and economy,” said Ali Najib, Deputy Head of Trading at Arif Habib Ltd. He explained that the new category creates structured investment avenues for the Pakistan Stock Exchange (PSX) and its participants.
For investors, Najib added, infrastructure funds can diversify portfolios, enhance stability, and generate long-term returns. For society, channeling domestic savings into infrastructure development will translate into new jobs, improved services, and sustainable growth.
Scope of Investment
Under the framework, Asset Management Companies (AMCs) can classify infrastructure schemes as equity, debt, or hybrid funds. Investment opportunities span a wide spectrum:
Energy, transport, and logistics
Water and sanitation
Communications networks
Social infrastructure such as hospitals, schools, and industrial parks
Affordable housing and tourism facilities
This range provides options for investors while ensuring that funds target projects of national importance.
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Safeguards for Investors
To build confidence, SECP has introduced strict conditions. Minimum fund size for perpetual schemes is set at Rs100 million. For closed-end schemes with maturity exceeding three years, AMCs must invest at least Rs25 million as seed capital. This ensures that fund managers have a direct stake alongside investors.
Closed-end schemes may allow periodic subscriptions and redemptions after one year, but such terms must be clearly defined in offering documents.
Net Asset Value (NAV) disclosures are mandatory at intervals not exceeding one month. Each scheme must also maintain at least 70% of its net assets in infrastructure securities. Any shortfall must be rectified within three months.
Fee and Load Structure
Management fees are capped at 3% for equity schemes and 1.5% for debt schemes. Hybrid funds follow a weighted average formula. Sales loads are prohibited, though contingent loads may apply in the event of early redemptions from closed-end funds.
These limits aim to protect investors while maintaining sustainability for fund managers.
Raising Standards in Public Projects
Experts believe that the introduction of infrastructure funds could raise transparency and accountability in Pakistan’s public projects.
“Public projects in Pakistan have often been marred by corruption and poor quality,” observed Maaz Azam, Research Head at Optimus Capital Management. “But a regulated fund structure can enforce higher standards and introduce return-oriented practices.”
Azam described the framework as an “alternative investment avenue” that gives investors exposure to a new asset class while helping the country achieve long-term infrastructure development goals.
Linking Capital Markets to Development
The launch of infrastructure funds reflects SECP’s broader strategy to deepen Pakistan’s capital markets. The initiative forms part of the Fund Management Department’s Roadmap 2025-26, which seeks to expand investment products, attract global investors, and strengthen domestic confidence in financial institutions.
By introducing this framework, SECP hopes to unlock fresh pools of domestic savings and encourage participation in projects that directly impact economic growth.
National Impact
The benefits of infrastructure funds are not limited to investors. For ordinary citizens, the indirect impact could be transformative.
When savings flow into infrastructure, communities gain new roads, housing projects, hospitals, and schools. Jobs are created in construction, operations, and allied industries. Improved logistics and energy supply support businesses and industries. In the long run, living standards rise, and economic growth becomes more sustainable.
Building Investor Confidence
The SECP framework also seeks to enhance investor trust in Pakistan’s financial system. By setting minimum capital requirements, mandating NAV disclosures, and capping fees, the regulator has prioritized accountability. These measures may encourage both domestic and international investors who previously hesitated due to regulatory concerns.
Analysts expect that if implemented effectively, infrastructure funds will not only bridge the financing gap but also expand the depth and liquidity of Pakistan’s markets.
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