KARACHI: A proposed Saudi-Pakistan private equity fund is aiming to raise an initial $500 million that could eventually expand to several billion dollars, a Pakistani investor of the fund told Arab News on Tuesday.

The development comes as Saudi Arabia and Pakistan seek to turn economic ties into private-sector investments, although its implementation will depend on securing regulatory approvals, attracting committed capital and identifying commercially viable projects.

Three-fourths of ​this new fund ‌will be invested ‌in Pakistan, while the rest will be invested in Saudi Arabian projects, according to the Saudi-Pakistan ​Joint ‌Business ⁠Council, which was ​formed by ⁠the governments of both countries.

Arif Habib, chairman of Arif Habib Group, said the regulatory process for the fund could take at least three months, with work already underway to register its’s management company in the relevant jurisdictions.

“The idea is to start the fund with $500 million and subsequently expand it to multiple billions of dollars,” Habib told Arab News in an interview in Karachi. “This will depend on how investment opportunities are identified in both countries.”

Habib, who signed a memorandum of understanding (MoU) representing Pakistani investors at Monday’s launch of the fund, said the agreement marked the first step toward establishing the fund.

“I believe it will take at least three months to complete the regulatory process,” he said. “After that, investors will be invited to contribute funds.”

Investors from both countries have expressed interest but formal commitments and disbursements would follow the fund’s establishment, according to Habib.

A list of participants from the Saudi side includes Al Ajlan Group, Tayba Group, RAEM Group, Al Sharif Group, Saudi Meters Company, Sumou Global Investment, Bin Dawood Investment, ASYAD Holding Group and Red Sea Gateway Terminal.

The businesses represented sectors ranging from investment and real estate to energy, infrastructure and logistics. Their participation, however, did not constitute confirmed financial commitments to the fund.

Under the proposed arrangement, Saudi and Pakistani investors would contribute equally, with 75 percent of the capital earmarked for Pakistan and 25 percent for Saudi Arabia. The fund would target opportunities in agriculture, mining, technology, manufacturing, construction and real estate as well as potentially viable infrastructure projects.

Habib said several projects had already been identified and discussed but had yet to be formalized. He cited Pakistan’s Main Line-1 railway project linking Karachi and Peshawar and plans to develop government-owned land as potential opportunities.

In Saudi Arabia, the fund could explore investments in technology, petroleum, construction and real estate sectors, according to Habib. The proposed fund would have a board and a management committee comprising Saudi and Pakistani representatives, with a chief executive appointed through mutual consultation.

Habib acknowledged that previous investment agreements between the two countries had often failed to translate into substantial investments, but said the latest initiative differed because private investors from both countries were taking the lead.

“This time, the private sector has been given the lead, with private-sector participation from both countries,” Habib said, expressing confidence that private-sector involvement would help translate these plans into actual investments.

In a statement on Monday, Prince Mansour bin Mohammad Al-Saud, chairman of the Saudi-Pakistan Joint Business Council, said the fund would strengthen commercial foundations of the two countries’ longstanding relationship.

“Pakistan is a natural partner for the Kingdom, and Saudi investors are looking for partners and markets where they can grow with confidence,” he said.

Habib said recent visits by Saudi business delegations to Pakistan, improving economic stability and a favorable geopolitical environment were encouraging investor interest in the South Asian country.

“There is also support from both governments,” he said. “I believe the current environment is ideal for developing initiatives of this nature.”