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Chinese EV maker Xpeng increases U.S. IPO size to $1.5 billion
Chinese electric vehicle (EV) maker Xpeng XPEV.N has increased the size of its U.S initial public offering (IPO) to about $1.49 billion, two sources with direct knowledge of the matter said. The company will price its shares at $15 each, the sources said, after initially indicating they would be sold for $11 to $13 when the deal was launched on Friday. Xpeng, which counts Chinese e-commerce titan Alibaba (BABA.N) among its backers, had initially targeted raising $1.11 billion. It had planned to sell 85 million American Depository Shares (ADS) but increased that to about 99.7 million shares following higher-than-expected demand from investors, the sources said on condition of anonymity as the information is not yet public. Xpeng declined to comment.
Based on the new size of the deal, Xpeng would be valued at around $11.2 billion following its IPO. Its shares will start trading in New York on Thursday. There is also a greenshoe option in which another 14.96 million shares can be issued within the next 30 days that would allow Xpeng to raise a further $224.4 million.
https://www.reuters.com/article/us-xpeng-ipo/chinese-ev-maker-xpeng-increases-u-s-ipo-size-to-1-5-billion-say-sources-idUSKBN25N040
What is a Greenshoe Option?
A greenshoe option is an over-allotment option. In the context of an initial public offering (IPO), it is a provision in an underwriting agreement that grants the underwriter the right to sell investors more shares than initially planned by the issuer if the demand for a security issue proves higher than expected. Over-allotment options are known as greenshoe options because, in 1919, Green Shoe Manufacturing Company (now part of Wolverine World Wide, Inc. (WWW) was the first to issue this type of option. A greenshoe option provides additional price stability to a security issue because the underwriter can increase supply and smooth out price fluctuations. It is the only type of price stabilization measure permitted by the Securities and Exchange Commission (SEC).
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https://www.investopedia.com/terms/g/greenshoe.asp
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