Morningstar Switches IPO Underwriters

Morningstar announced late on Friday that it had changed the lead underwriter for its IPO from Morgan Stanley to W.R. Hambrecht, The Wall Street Journal reports. The investment researcher also said that it would sell its shares through an auction rather than a traditional sale.

Chicago-based Morningstar said it had "amicably parted ways" with Morgan Stanley because the investment bank had "elected not to participate in the auction approach." Underwriters are often averse to auctions because they generally result in lower fees. In a traditional IPO, however, underwriters have more of a say in the price because they can market the company's shares mostly to institutional investors.

The last company to go public via an auction in recent times was Google, which raised nearly $2 billion last August but cut its

offering price to $85 a share from an estimated price range of $108 to $135 a share. Morgan Stanley was a lead underwriter in that IPO.

Morningstar's IPO, from which the company expects to raise more than $100 million, is likely to be closely watched. In September, the SEC began investigating the firm for not correcting inaccurate fund data on its Web site. Then, in December, as part of a wider investigation of the investment consulting business, New York Attorney General Eliot Spitzer subpoenaed the company's subsidiary, Morningstar Associates LLC, about investment-consulting services that it offers to providers of retirement plans.

Morningstar did not say when the IPO would occur, citing securities regulations.

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