Green shoe option

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2017 Sir,
I don't understand the concept of Green shoe option. How it's possible for the book runners to purchase the shares at issue price from stock market when the price rises?or Does it mean the company will allot them new shares at the issue price or something else?

Amol S Joglekar

Amol S Joglekar (Expert)
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12 July 2017 Greenshoe option is a special provision in an IPO prospectus, which allows underwriters to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected.