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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The fund is raising Rs 200 crore with a green shoe option of Rs 100 crore to invest in opportunities arising out of increasing per capita income, changing spending pattern of the consumers and technology disruption around these segments.
Meethaq's Sukuk Series 2 comes with a green shoe option in case of oversubscription and the issue has an indicative profit rate of 5.5 per cent per annum with a tenor of five years.
FINCA MFB is in the process of issuing a rated, unsecured, subordinated Tier-II PPTFC amounting to Rs 1.5b with the green shoe option of Rs 500 million, having a tenor of 7 years.
In the first issue, Treasury offered a Sh1 billion infrastructure bond with a Sh4 billion green shoe but only managed to get Sh247 million from the market.
"It is a privilege to connect with individuals who are learning relational, communication and emotional tools to be better parents, spouses, employees and employers and community volunteers at Green Shoe," she said.
"ASIL intends to issue OTC (over the counter) listed, rated and secured sukuk of up to Rs5 billion (inclusive of green shoe option of Rs1 billion) for the tenor of six years inclusive of a grace period of 2 years in order to fulfill its expansion plans and invest in futuristic technologies," the steelmaker said.
The tenor of the OTC listed, rated and secured sukuk (inclusive of green shoe option of Rs1bn) is for six years inclusive of a grace period of two years.
'ASIL intends to issue OTC listed, rated and secured Sukuk upto Rs5 billion inclusive of Green Shoe option of (additional) Rs1 billion for six years (including grace period of 2 years)...in order to fulfill its expansion plans and investing in futuristic technologies,' stated ASIL.
The notification said the bank's board of directors had given approval to raise their Additional Tier 1 Capital as redeemable capital in the form of unsecured, subordinated, rated, listed perpetual and non-cumulative Term Finance Certificates ('TFCs') up to the extent of the face value of Rs4 billion inclusive of a Green Shoe Option of Rs1 billion.
500 million green shoe options) for Hascol Petroleum Limited to cater to its working capital requirement.