How Alibaba Boosted Its IPO Size by Taking a Walk in Greenshoes

When Alibaba Group Holding Ltd. increased the size of its initial public offering yesterday, it used a mechanism that was invented before any American president had yet visited China.

It was February 1963, and a U.S. company called Green Shoe Manufacturing Co. was readying a public offering, managed by investment bank Paine, Webber, Jackson & Curtis. It was a routine deal except for one provision: the underwriters had the option to increase the size of the offering by 15,500 shares.