The announcement that Brady Technologies had divested its commodities software business to STG this morning was no surprise here. There had been a pervasive rumour for many months that Brady was trying to sell its commodities business and focus in on electric power and credit. I even told the Brady management team this at E-World and could tell from their guarded smiles that this was probably in the works. It is an interesting move however for Brady is known for its historically dominant position in metals. On the surface, it is akin to selling the crown jewels. However, Brady has struggled in recent years to find its identity and with what strategy to pursue culminating in Hanover’s investment in the business.
It was clear that under Hanover’s ownership, Brady was setting a different tack. Its’ acquisitions of Igloo and cRisk and the investment in a new product (Powerdesk) targeting distributed power in the UK, Nordics and broader Europe, suggested that it saw its place within the context of the energy transition in Europe. This refocus and strategy seems to have paid off as Brady seems to be making a resurgence and has signed new customers in that space. It has other software products that fit there too including the nordics focussed EDM and its European scheduling and despatch software. With what I suspect to be somewhat limited funding, what could it do to modernise a broad suite of applications in the metals and broader commodities space that were aging even if still widely implemented? What did its metals legacy mean to the company and to its new shareholders and management especially in the context of its new direction?
The divestment to STG makes sense within this context. The Brady Commodities business is preserved and will now see its own investment and strategy under the guidance of STG yet freeing Brady technologies to leverage the investments and progress it has made in electric power. The future seems to be electric power and this will likely be one of the larger commodity markets perhaps ironically along with metals like Copper, Lithium and so on. I have yet to speak to Brady, Hannover or STG but have reached out for comment. However, as an analyst this move was not surprising and seems to allow both sides of the original Brady business to breathe and grow.
The metals CTRM space is now much more crowded and STG will have a fight on its hands to defend its #1 position as many of the new entrants are all new technology in the cloud. FinTrade, its Commodity Management solution, I have always viewed as a strong product that needs to be modernised to capture significant market share. We will have to wait and see what STG does but it has got a strong if eroding position in the market to defend, consolidate and grow. We will watch with considerable interest.