greenshoe


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Greenshoe Option

A provision in some underwriting contracts allowing the underwriter to sell more shares to investors than were originally agreed. In an underwriting agreement, the underwriter agrees with the issuer of a security to place a certain amount with investors. If demand for the security exceeds the underwriter's supply, the greenshoe option allows the underwriter to avoid a sudden jump in price by increasing supply. Normally, the greenshoe option allows the underwriter to increase supply up to 15%. It is important to note that not all underwriting contracts have greenshoe options, especially in situations in which the issue is for a limited project for which the issuer only needs a certain amount of capital. It is also called an overallotment option.

greenshoe

An underwriting agreement provision that permits syndicate members to purchase additional shares at the original offering price. Shares in the greenshoe may consist of additional shares from the issuing company or may come from existing shareholders as a secondary offering. For example, the 2002 IPO of CIT Group included 200 million shares plus a greenshoe of 20 million additional shares that could be purchased by syndicate members at the $23 offering price within 30 days. Also called overallotment option.
References in periodicals archive ?
The total issue volume, including greenshoe was approximately 119 million.
Also announces the completion of $4M greenshoe in Series A-round, bringing total raise to $16M -- one of the largest ever Series A rounds in hospitality tech.
The greenshoe option was for the purchase of up to an additional 749,478 ADSs and 233,021 new ordinary shares, representing 15% of the shares placed in the global offering.
The underwriters exercised a so-called greenshoe option to sell an additional 48 million American depositary shares, said the person, who asked not to be identified as the information is private.
Following the deal, the free float will stand at 45%, excluding the greenshoe option, and at 49% if the option is fully exercised.
85% of its shareholding interest (as part of the full exercise of the greenshoe option involving 15% of the Global Offering).
The greenshoe warrants shall have a term of 18 months, have an exercise price equal to the offering price, and will be exercisable six months after closing of the offering.
Following the IPO, Ithmar, through its affiliate Astro II SPV, will continue to be a major shareholder in Al Noor with a 25 percent stake post the exercise of the greenshoe, demonstrating its commitment to supporting the business and creating value over the long-term.
A 15 per cent greenshoe, or over-allotment option, made up of existing shares could be exercised at a later date, the company said in an emailed statement yesterday.
A 15 percent greenshoe, or overallotment option, made up of existing shares will be exercised, NMC said on Monday.
08 per share, seeking to raise up to $700 million including a greenshoe option to meet additional demand.
Zynga placed 10mn shares (about 11% of total capital) and its underwriters have a 30day greenshoe option to sell another 15mn shares.