Price stabilisation and Greenshoe option

Price stabilisation in IPO

The IPO-company can use an over-allotment option that allows the underwriters to sell an additional amount of shares, up to 15 %, of the original IPO issue amount. If exercised, the over-allotment shares will be used to defend the IPO price by the appointed stabilising manager during the first 30 calendar days after the trading has commenced. Price stabilisation can only be made at the IPO price or below, never above. The IPO company will issue an option (greenshoe option) to the stabilising manager for the over-allotment share amount that can solely be used by the stabilising manager to cover the over-allotment. The option can be exercised to subscribe shares in full or in part.

If no price stabilisation trades are made, the option is fully exercised, the IPO company will receive additional funds. If price stabilisation has occurred, and all of the over-allotment shares are bought from the market, the option will not be used. In this case the IPO company will not receive any additional funds.

Lago acts as a stabilisation manager with a great deal of experience. Lago will incorporate in-house developed algorithms, which have been extensively proven in the market, for the best possible outcome.

For more information, please do not hesitate to contact us! jani.koskell(a)lagokapital.fi or +358 10 320 8955