What is disinvestment ? Its general definition in 500 words.?

Question

its definition and reasons.

Answer 1

Sell Equity Shares76%, to any one
or general public, through IPO route
or Bulk Deal (Balco- deal, Govt. Hotels)
and raise money.

76% share transfer, gives the buyer,
absolute control of the company,
to pass any Special Resolution for
the new management.

Answer 2

The action of an organization or government selling or liquidating an asset or subsidiary. Also known as "divestiture".

2. A reduction in capital expenditure, or the decision of a company not to replenish depleted capital goods.

1. A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.

2. A company will likely not replace capital goods or continue to invest in certain assets unless it feels it is receiving a return that justifies the investment. If there is a better place to invest, they may deplete certain capital goods and invest in other more profitable assets.

Alternatively a company may have to divest unwillingly if it needs cash to sustain operations.

Answer 3

As the name itself suggests it is the opposite of investment. Any investor can decide to disinvest for reasons of getting liquid cash or if the investment is not giving satisfactory returns. In macroterms, disinvestment is resorted to by Government to raise resources and to share management responsibility with willing partners.