MORNINGSTAR Inc. (NASDAQ:MORN), the U.S.-based investment data and research provider, says it will grow the UK investor relations business it acquired as part of its $51.6 million purchase of Hemscott, but has no immediate plans to expand the business internationally.
The first question asks how the IR business fits into Morningstar’s business model and how big the IR segment is in terms of the acquired company.
Here’s the answer:
“Hemscott’s investor relations business makes up about a third of the overall revenue of the businesses we’re acquiring from Hemscott. We view the investor relations business as a logical fit with Morningstar’s stated goal of helping investors make better investing decisions. We currently provide data and analytics for investor relations professionals through our Morningstar Direct platform and believe our comprehensive global ownership data is particularly useful to this segment. The Hemscott acquisition will allow us to develop a broader portfolio of offerings to help investor relations officers serve their shareholders. In addition, the Hemscott investor relations business leverages our equity data and expertise in Web site development and design.”
There’s definitely an opportunity for Morningstar to gain better insight into the corporate IR market through Hemscott’s 500-odd UK corporate clients. The Morningstar Direct platform mentioned in their answer hasn’t gained much traction with IR departments, mostly I suspect because it’s not tailored to their needs. But if Morningstar can do for the IR market what it has done for other markets in terms of technology and products, corporate IR departments could be in for a treat.
Unfortunately, it looks at this stage that only UK IR departments are going to benefit in the near term. In the second question about Hemscott IR, Morningstar responds to speculation about whether it will expand Hemscott’s IR website business to countries outside of the UK.
“We don’t have any immediate plans to expand the investor relations Web site business into additional countries, although we’ll consider it as part of our long-term business planning. Right now, we believe there are attractive opportunities for expansion in the United Kingdom given recent London Stock Exchange rules requiring AIM-listed companies to provide investor relations Web sites, as well as the potential for providing additional Morningstar products and services to these clients.”
I can’t say I like that answer, even though it’s a sensible one. The way I see it, the U.S. is begging for a competent competitor to inject some real innovation into a market dominated by the staid and the clueless.