Word of the Day
Greenshoe Option
It is an option used during an IPO or a bond/NCD issue to issue more securities than originally planned
It is also called the over-allotment option.
In an IPO, underwriters can issue up to 15% extra shares if investor demand is high.
In bond/NCD issues, the greenshoe option lets the company increase the issue size and raise more money when demand is strong.
Example: Cholamandalam Investment raised Rs 2,000 crore through NCDs (including Rs 1,400 crore green shoe). This means the company originally planned a smaller issue but increased the issue size because investor demand was strong.
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2June 27, 2026 3.1K 1
