Business Standard

Oversubscription provision overshadows base issuance in recent debt offers

India Infoline had a base amount of Rs 250 crore and oversubscription portion of Rs 1,750 crore

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Sachin P Mampatta Mumbai
An option for retaining oversubscription is said to have originated following an issue by the Green Shoe Manufacturing Company founded in 1919. For the first time, it reportedly introduced a clause for overallotment of the securities it was offering to the public. This ‘green shoe’ option has subsequently been used as a measure to mop up extra capital by selling additional securities, equity or debt when demand is greater than expected.

A 100 years later, 2019 has seen a number of debt issuances exhibiting a phenomenon where the provision for oversubscription outstrips the base issue. In other words, the mechanism

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