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.

overallotment option

See greenshoe.
References in periodicals archive ?
BANKING AND CREDIT NEWS-May 9, 2017-Eagle Point Credit announces exercise of overallotment option in stock offering
M2 EQUITYBITES-May 9, 2017-Eagle Point Credit announces exercise of overallotment option in stock offering
Guotai Junan offered and sold an aggregate of 1,040,000,000 H shares before exercise of the overallotment option, which raised approximately HK$16.
In addition, RBS will grant the underwriters an overallotment option to purchase up to an additional 11.
38 billion, including the overallotment option or the additional shares that the stabilizing agent can take up in case of strong demand.
NASDAQ: MITK) said that the underwriter of its previously announced public offering of common stock has exercised in full its overallotment option to purchase an additional 428,571 shares of common stock at the public offering price of USD5.
3 million existing shares, including an overallotment option of a maximum 13.
3% interest in Copa once the share sale is completed, or a 10% interest if the overallotment option is exercised in full.
TravelCenters of America LLC (NYSE MKT: TA) today announced that the underwriters of its public offering have exercised a portion of their overallotment option to purchase an additional $10 million of 8.
6m, assuming exercise in full of the overallotment option, with current institutional investors.
38 billion, including the overallotment option or the additional shares that underwriters may take up in case of strong demand for the offering.
Remarks 1: If overallotment option is exercised, number of shares to be sold by Mitsui will be up to 4,025,000.