Definition of Direct investment:
Defined by the International Monetary Fund (IMF) as Investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investors purpose being to have an effective voice in the management of the enterprise. In practice, this translates to an equity holding of 10 percent or more in the foreign firm.
The purpose of foreign direct investment (FDI) is to gain an equity interest sufficient to provide control of a company. In some instances, it involves a company in one country opening its own business operations in another country, while in other cases it involves acquiring control of existing assets of a business already operating in the foreign country. A direct investment can involve gaining a majority interest in a company or a minority interest large enough to provide the investor with effective control of the company.
Direct investment, more commonly referred to as foreign direct investment (FDI), refers to an investment in a foreign business enterprise designed to acquire a controlling interest in this enterprise. The direct investment provides capital funding in exchange for an equity interest without the purchase of regular shares of a company's stock.
How to use Direct investment in a sentence?
- You need to try and figure out if the direct investment of your time and resources will end up paying off.
- I realized that we were making a direct investment and that it was sort of a gamble, but it was a necessary one.
- The investor made a direct investment into the company that he had much admiration for and wanted to help succeed in becoming a profitable business.
Meaning of Direct investment & Direct investment Definition