Updated on March 6, 2023
Divestment is a process of selling off a division or a unit of a business in part or in full. The purpose of divestment can be to generate funds from the sale of the assets or to exit the business line that no longer meets the expectations or expertise needed. The government recently announced the divestment of many of the PSUs either in part or in full. The recent LIC IPO was part of the government Divestment plan.
Primary reasons for divestment
The primary reasons for divestment can be
To meet the immediate need for funds
To exit a loss-making division and concentrate on the primary business
Access to funds for better investment opportunities Improving returns to shareholders
Meeting mandatory obligations set by the government or any legislation.