Definition
Disinvestment via Offer for Sale and ETF
The government uses offers for sale and exchange-traded funds of PSU shares as market routes to divest stakes and raise revenue.
Beyond outright strategic sale, the government sells minority PSU stakes through stock-market routes such as an offer for sale (OFS), where shares are auctioned to investors, and through PSU ETFs that bundle several public sector stocks into a single fund retail investors can buy.
These routes broaden participation, deepen markets and let the government time sales to market conditions to meet its disinvestment target. ETFs in particular packaged government holdings into a product that mobilised retail and institutional demand for staggered divestment.
Related terms
- DisinvestmentDisinvestment is the sale by the government of part or all of its stake in a public sector enterprise to raise resources or improve efficiency.
- Disinvestment TargetThe disinvestment target is the amount the government budgets to raise in a financial year by selling stakes in public sector enterprises.
- PSU (Public Sector Undertaking)A Public Sector Undertaking is a company in which the central or state government holds a majority stake, operating in areas from energy to banking.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.