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 ?
5 billion (including Rs500 million greenshoe options) for Hascol Petroleum Limited to cater to its working capital requirement.
M2 EQUITYBITES-July 25, 2017-Terrafina's underwriters fully exercised greenshoe option for CBFIs in its global offering
5%, which is subject to a greenshoe option, will continue to be managed by Arle, along with the remaining interests of the Candover 2005 Fund.
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.
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.
BANKING AND CREDIT NEWS-July 30, 2012--Chuy's underwriters fully use greenshoe option(C)2012 M2 COMMUNICATIONS http://www.
During the capital increase, the firm will issue 684,210 new shares, which may be raised up to 786,841 shares if the greenshoe option is exercised.
Summary: Dairy producer Milkiland (MLK PW) announced that the lead manager of its IPO on the Warsaw Stock Exchange exercised the greenshoe over-allotment option in full on December 30
The firm opened the share sale on April 29 to raise USD80m with a greenshoe option to further raise USD30m.
The company has the greenshoe option to raise the issue volume by up to EUR 35 million.
The issue has a greenshoe option of INR1bn, it said.
The issue also includes a greenshoe option of 150 million francs (pounds 15.