greenshoe
/ˈɡriːn.ʃuː/
Definition
A clause in an underwriting agreement that allows the issuer to issue additional shares to meet higher-than-expected demand during a public offering.
Etymology
The term originates from the 'Green Shoe Manufacturing Company,' which was the first firm to use this specific over-allotment provision in a 1963 initial public offering. The name of the company became synonymous with this financial mechanism in modern investment banking.
In the news
In this article, Inox Green Energy mentions the greenshoe option as a flexible component they may include when issuing new securities to raise capital. It acts as a safety mechanism to provide extra liquidity if investor demand exceeds the initial offering amount.
Inox Green Energy board to mull fundraising on 22 July
Read the full article ↗Business Standard