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 Over-Allotment Option was granted to the Underwriters in connection with Osisko's previously announced secondary offerings of 7,850,000 Common Shares, which closed on July 11, 2019.
M2 EQUITYBITES-March 13, 2019-Tuscan Holdings closes full sale of underwriter's over-allotment option of 3.6m units in IPO
Global Banking News-March 13, 2019-Tuscan Holdings closes full sale of underwriter's over-allotment option of 3.6m units in IPO
BANKING AND CREDIT NEWS-January 8, 2019-CF Finance Acquisition closes over-allotment option related to IPO
MONTREAL: Laurentian Bank of Canada issued an additional 342,300 common shares at $54.80 per Over-Allotment Share pursuant to the exercise of the over-allotment option granted to the syndicate of underwriters led by TD Securities Inc., BMO Capital Markets and CIBC Capital Markets, as joint bookrunners, in connection with its recently completed common share offering.
(STEM) announced that the underwriters of the company's public offering that initially closed on April 29, 2015 have purchased an additional 2,757,250 shares of the company's common stock at a price of $0.699 per share, before the underwriting discount, in connection with the exercise of their option to purchase additional shares of common stock (the "Over-Allotment Option").
Encana has granted the underwriters an over-allotment option to purchase up to an additional 12,842,475 Shares at the Offering Price, exercisable for a period of 30 days after closing of the Offering (the 'Over-allotment Option').
NORDIC BUSINESS REPORT-December 1, 2014-Lifco announces exercise of over-allotment option in connection with the listing of its shares
TELECOMWORLDWIRE-August 18, 2014-The KEYW Holding closes on USD19.5m over-allotment option
12 November 2013 - Brazilian metals and mining group Vale SA (NYSE:VALE) said it would sell up to 407.1m shares in Norwegian aluminium company Norsk Hydro ASA (LON:NHY) in a base offering and further up to 40.7m Norsk Hydro shares through an over-allotment option.
Biopharmaceutical company Heat Biologics Inc (NASDAQ:HTBX) revealed on Tuesday that its underwriters have partially exercised their over-allotment option to purchase an additional 100,000 shares of its common stock.