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.

INVESTOPEDIA EXPLAINS'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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RELATED FAQS
  1. How does privatization affect a company's shareholders?

    The most recognized transition between the private and public markets is an initial public offering (IPO). Through an IPO, ... Read Full Answer >>
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    Since the passing of the Sarbanes-Oxley Act, a significant number of public companies have chosen to go private. The reasons ... Read Full Answer >>
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    For multinational companies, political risk refers to the risk that a host country will make political decisions that will ... Read Full Answer >>
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    When an organization decides to engage in international financing activities, they also take on additional risk as well as ... Read Full Answer >>
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