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Morningstar is planning to use an auction to allocate shares in its initial public offering, becoming the first significant stock market listing to follow the controversial path taken by Google, the internet search engine group, in August.
The influential mutual fund tracker, which is hoping to raise up to $100m in the deal, announced the decision last night, touting it as an opportunity for all investors - not just large ones - to access the shares.
"There are no preferential allocations, and every bid is handled in the same way," said Joe Mansueto, chairman and chief executive of Morningstar. "This equality resonated with us and we've been considering it for some time."
Morningstar said it was no longer working with the investment banks originally slated to manage the IPO, including Morgan Stanley, Deutsche Bank, and William Blair, which did not want to run an auction in this case. They had been replaced with WR Hambrecht, which has worked on a number of IPOs run using the auction technique.
Along with Credit Suisse First Boston, Morgan Stanley managed Google's IPO, by far the largest and highest-profile stock market listing carried out via an auction.
Google's move was controversial in that it challenged the way Wall Street banks traditionally run IPOs, by allocating stocks to preferred institutional investors. Investment banks typically earn greater fees when underwriting traditional IPOs compared with auctions.
The run-up to the Google IPO was particularly fraught, as the Silicon Valley group run by founders Sergey Brin and Larry Page was forced to slash the price and size of the offering. But the process used to allocate shares did not run into any technical difficulties, or result in any significant legal challenges.
Moreover, Google's shares have risen steadily since the listing, fostering a widespread belief that the IPO was successful. Yesterday its shares closed at $193.85, against the offer price of $85.
In May last year, Morningstar filed for an IPO, after experiencing a 27 per cent increase in revenues, which rose to $139.5m in 2003. In its filing, Morningstar said it tracked 54,700 mutual funds, serving more than 3m individual investors, 100,000 financial advisers, and 500 institutional clients in 16 countries.
The influential mutual fund tracker, which is hoping to raise up to $100m in the deal, announced the decision last night, touting it as an opportunity for all investors - not just large ones - to access the shares.
"There are no preferential allocations, and every bid is handled in the same way," said Joe Mansueto, chairman and chief executive of Morningstar. "This equality resonated with us and we've been considering it for some time."
Morningstar said it was no longer working with the investment banks originally slated to manage the IPO, including Morgan Stanley, Deutsche Bank, and William Blair, which did not want to run an auction in this case. They had been replaced with WR Hambrecht, which has worked on a number of IPOs run using the auction technique.
Along with Credit Suisse First Boston, Morgan Stanley managed Google's IPO, by far the largest and highest-profile stock market listing carried out via an auction.
Google's move was controversial in that it challenged the way Wall Street banks traditionally run IPOs, by allocating stocks to preferred institutional investors. Investment banks typically earn greater fees when underwriting traditional IPOs compared with auctions.
The run-up to the Google IPO was particularly fraught, as the Silicon Valley group run by founders Sergey Brin and Larry Page was forced to slash the price and size of the offering. But the process used to allocate shares did not run into any technical difficulties, or result in any significant legal challenges.
Moreover, Google's shares have risen steadily since the listing, fostering a widespread belief that the IPO was successful. Yesterday its shares closed at $193.85, against the offer price of $85.
In May last year, Morningstar filed for an IPO, after experiencing a 27 per cent increase in revenues, which rose to $139.5m in 2003. In its filing, Morningstar said it tracked 54,700 mutual funds, serving more than 3m individual investors, 100,000 financial advisers, and 500 institutional clients in 16 countries.