Advertisement

IPO Will Employ Auction

Share
From Reuters

Morningstar Inc., the mutual fund and stock information service, said Friday that it would use an auction format for its proposed initial public offering of stock, a method that Web search engine Google Inc. used for its IPO.

The Chicago-based company also said it would not use its original underwriters, led by Morgan Stanley, which rejected the auction approach for the $100-million IPO. Morgan Stanley had been one of two lead arrangers of the Google IPO auction, along with Credit Suisse First Boston.

Morningstar said it retained San Francisco-based WR Hambrecht & Co., which has conducted auction-based securities offerings for several years, to handle its IPO.

Advertisement

Initial public offerings generate banking fees that can reach 7%. Morningstar filed for its offering in May.

“Since Morningstar had not yet set a price range for its shares, it will be hard to evaluate whether this change resulted from a difference between what Morgan and Hambrecht felt the company is worth, or something else,” said David Menlow, president of IPOfinancial.com in Millburn, N.J.

Morningstar, one of the leading fund research services, is perhaps best known for its star system for rating past mutual fund performance.

Advertisement