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 ?
'Meethaq Islamic Banking has received the CMA's approval to exercise a greenshoe option to increase the original offer size of Meethaq Sukuk Series 2 from OMR25m to OMR45.6m, which is the total amount of the subscription received', Bank Muscat said.
They're likely to pass on that option - called a "greenshoe" - if shares can be had in the open market at lower prices.
The banks in charge were afforded a greenshoe option of approximately 5 million shares.
Summary: Emirates NBD, Dubai's largest lender, confirmed on Sunday that it has exercised the greenshoe option by selling 15 per cent of the IPO of Ne...
In 2017, the Treasury offered Sh1 billion infrastructure bond with a Sh4 billion Greenshoe but only managed to get Sh247 million from the market.
Karachi -- BankIslami Pakistan became the first Islamic Bank to successfully launch Pakistan's First Shariah Compliant Commercial Paper (CP) Issue worth Rs1.5 billion (including Rs500 million greenshoe options) for Hascol Petroleum Limited to cater to its working capital requirement.
The company's retained interest in Technogym of 1.5%, 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.
has unveiled the pricing of an underwritten offering of units of its common shares, convertible preferred shares and short-term "greenshoe" warrants.
Thus, the company still hopes to secure EUR1.3m in fresh funds, which may be increased to EUR1.495m in case 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.