overallotment option

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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overallotment option

See greenshoe.
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 ?
Cal-Comp in its filing said it will offer some 371.42 million shares for its primary offering with an overallotment option of 55.71 million secondary shares for up to P25 apiece, or raising a total of P10.68 billion.
Cal-Comp Philippines is looking to sell 371,423,100 common shares with an overallotment option of 55,731,500 common shares for up to P25 each.
Documents filed with the SEC show that the firm plans to offer 371.42 million shares (Firm shares) with an overallotment option of 55.71 million secondary shares for up to P25 apiece.
BANKING AND CREDIT NEWS-August 6, 2019--Owl Rock Capital announces full exercise of overallotment option by underwriters
M2 EQUITYBITES-August 6, 2019--Owl Rock Capital announces full exercise of overallotment option by underwriters
Global Banking News-August 6, 2019--Owl Rock Capital announces full exercise of overallotment option by underwriters
The value of the Offer already includes the full exercise of 43,687,500 shares of the overallotment option ('Greenshoe Option'), pursuant to article 24 of ICVM 400, settled on this date.
DPW has granted the underwriter an overallotment option to purchase up to an additional 2,333,325 shares of Common Stock and/or 2,333,325 Warrants to cover over-allotments, if any.
closed an underwritten registered public offering of $100,050,000 aggregate principal amount of 6.875% Senior Notes due 2023, which amount included $13,050,000 aggregate principal amount of notes issued pursuant to the full exercise by the underwriters of their overallotment option.
In January, SLI disclosed that it was authorized to avail of a seven-year corporate note facility with financial institutions, for an aggregate amount of P3 billion and with an overallotment option of P2 billion.
Assuming no exercise of the overallotment option and after the underwriting discount and estimated offering expenses payable by the company, Sequans expects to receive net proceeds of about USD12.9m.