Renationalization

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DEFINITION of 'Renationalization'

Bringing assets and/or industries back into national-government ownership after they had previously been privatized. The motives for renationalization can be widely varied, but are always based in either economics or politics.

Renationalization often occurs in sectors that are required for the country to operate smoothly, or where monopolies must occur. Examples of sectors that are commonly renationalized are utilities and transportation.

If no compensation is given to the previous owners, this process is called expropriation, and it is commonly seen in times of war.

BREAKING DOWN 'Renationalization'

Renationalization can be a risk investors see when investing in a foreign industry of a developing country. Developing countries might begin to privatize industries and assets previously under national control and allow foreign investment for the first time. Should the privatization not work, or should political instability prevail, renationalization could occur. In such a case, the largest risk would be that no compensation is given to the previous owners (i.e., shareholders).

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