greenshoe = Mehrzuteilungsoption - ein Mechanismus um Konsortialbanken das Recht einzuräumen, nachträglich zusätzliche Wertpapiere zum Emissionspreis auszugeben --- GOOGLE INDEX greenshoe: approximately 400,000 Google hits
Profit from the GREENSHOE – a standard component of many IPOs – was in addition to underwriting fees earned by the New York-based bank for handling Facebook’s $104bn stock exchange debut on Friday.
If the bank uses its GREENSHOE option in Hong Kong, the combined offering will raise $21.9 billion in the world's biggest initial public offering...
(New York Times)
- an agreement that permits certain investors to purchase additional shares at the original offering price of an initial public offering.
(Wall Street Words)
A greenshoe is one of several rules regarding an initial public offering (IPO) that helps a company or business to go public (to be traded on a stock exchange). Also called a "greenshoe option," it is designed to stabilize the price of the stock. There are several kinds of greenshoe options that underwriters, the people responsible for bringing the stock offering to market, can use to make sure that the stock is priced correctly.
When a company goes public, it does so with an initial public offering of stock. Investors can buy in at a defined stock price, but they often must hold the stock for a certain amount of time. This is called an IPO lock-up period. The rules of the lock-up period mean that the stock price is not allowed to fluctuate as it generally would on the common market.
In a greenshoe option, the underwriter can issue up to 15% more stock than the original offering if high demand is a problem. According to experts, using additional stock in a short sale can also help stabilize the stock price. What the underwriter does with the extra stock can help create a stock price that will resemble the initial offer price.
The greenshoe option is named after the Green Shoe Company, now known as Stride-Rite, that pioneered its use. Many companies involved in an IPO have since applied a greenshoe option in order to encourage growth during and after an initial public offering.
(adapted from Wisegeek.com)
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