Contractual clause allowing the underwriter to buy shares of a registered stock offering
Greenshoe, or over-allotment clause, is the term commonly used to describe a special arrangement in a U.S. registered share offering, for example an initial public offering (IPO), which enables the investment bank representing the underwriters to support the share price after the offering without putting their own capital at risk.[1] This clause is codified as a provision in the underwriting agreement between the leading underwriter, the lead manager, and the issuer (in the case of primary shares) or vendor (secondary shares).[2] The provision allows the underwriter to purchase up to 15% in additional company shares at the offering share price.[3][1]
The term is derived from the name of the first company, Green Shoe Manufacturing (now called Stride Rite), to permit underwriters to use this practice in an IPO.[4]
The use of the greenshoe (also known as "the shoe") in share offerings is widespread for two reasons. First, it is a legal mechanism for an underwriter to stabilize the price of new shares, which reduces the risk of their trading below the offer price in the immediate aftermath of an offer—an outcome damaging to the commercial reputation of both issuer and underwriter. Secondly, it grants the underwriters some flexibility in setting the final size of the offer based on post-offer demand for the shares.
^ ab"Excerpt from Current Issues and Rulemaking Projects Outline (November 14, 2000)". www.sec.gov. Retrieved 2021-05-30.
^Martin, Alexander, "Line Raises IPO Price Range to Meet Strong Demand" Wall Street Journal, July 4, 2016. Retrieved 2016-07-04.
^"Greenshoe Options: An IPO's Best Friend". Investopedia. Retrieved 2021-05-30.
^"Company history". Stride Rite. Stride Rite Children's Group LLC. 2012. Archived from the original on 27 May 2012. Retrieved 21 May 2012.
Greenshoe, or over-allotment clause, is the term commonly used to describe a special arrangement in a U.S. registered share offering, for example an initial...
offering that are of the most important to a registered representative. Greenshoe: A special arrangement in a share offering, for example an IPO, which...
the offering by up to 15% under a specific circumstance known as the greenshoe or overallotment option. This option is always exercised when the offering...
Alibaba's underwriters announced their confirmation that they had exercised a greenshoe option to sell 15% more shares than originally planned, boosting the total...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
US$5.1 billion in Shanghai (A-shares). Due to heavy subscriptions, the greenshoe (i.e. over-allotment) placements were exercised and ICBC's take rose to...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
overallotment option, which has ever since been known by the colloquial name of greenshoe. The firm moved its headquarters from Boston to New York in 1963. The...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
demand is high enough, the book can be oversubscribed. In these cases the greenshoe option is triggered. Book building is essentially a process used by companies...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
Corporate spin-off Direct public offering Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Pre-IPO Private placement Public offering...
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