The Japanese software giant
Softbank Corp. has agreed to invest $91 million in Chicago-based
Morningstar, Inc., in exchange for 20% ownership of the privately held Chicago company. Softbank's chief financial officer,
Yoshitaka Kitao will also become a member of Morningstar's board of directors. Morningstar chief executive officer Don Philips said that Kitao added intimate Internet expertise to the five-man board.
Softbank and Morningstar have already formed a joint venture in 1998, Morningstar Japan, K.K. Morningstar currently holds a 60% of the company, but Softbank has an option to take up to a 55% majority stake in the company if it so chooses.
Since Reuters Group bought Lipper, Thomson Financial bought Wiesenberger and Standard and Poor's bought Micropal-- all in the last two years -- Morningstar stands as one of the last independent mutual fund information companies.
The cash infusion comes at a key time for Morningstar, as the money will be needed to hold off growing competition for online financial information and services and fund the company's planned Internet expansion. The $91 million investment also adds to Morningstar's war chest and adds flexibility should the company enter new lines of business. One possible scenario is Morningstar's rumored entrance into the on-line advice business, competing with companies like
Financial Engines,
401(k) Forum,
Rational Investors, and others.
"The investment will be used to enhance content, handle increasing amounts of traffic, and increase marketing," Phillips told the MFWire.com, adding that Morningstar also planned to continue the company's international expansion, citing the announcement this past spring of a new venture in Australia and New Zealand.
The company will also implement plans to ramp up the company's services for managed investments and retirement plans, driving more services from print to its online space.
"Morningstar customers have driven our move to offer more products and services on an Internet platform," said Phillips. "Financial professionals are getting improved speed, depth and quality of downloadable, on-demand information, to support their businesses. This month, we're launching a significantly enhanced Morningstar.com site, demonstrating our ongoing commitment to enrich content, add proprietary tools and refine functionality to meet the needs of individual investors."
"And, we're aggressively working to meet the demand from our institutional customers to expand our line of Web-delivered products and services, especially among 401(k) to sponsors and providers."
Softbank already has stakes in more than one hundred Internet-related companies, including approximately 69 percent of
Ziff-Davis Inc. (
ZD), 26 percent of
Yahoo! Inc. (
YHOO), and 27 percent of
E*TRADE Group, Inc. (
EGRP). In Japan, Softbank owns 51 percent of
Yahoo Japan Corporation , 60 percent of
GeoCities Japan Corporation, 100 percent of
ZDNet Japan, 50 percent of
broadcast.com japan k.k., 60 percent of
E-Loan Japan K.K., as well as 58 percent of
E*TRADE Japan K.K.
"We believe that the investment information industry and in particular the online segment, is going to be one of the highest
growth businesses of the next decade," said Kitao. "This agreement reflects our confidence in Morningstar's ability to continue to expand its role as the indispensable resource for unbiased investment information services, data, research, news and analysis."
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