Hexagon to spin off ALI and SGI into NewCo in early 2026

Earnings season is almost over, and there’s a lot to catch up on, but news just came into the inbox that Hexagon has decided that it will, indeed, spin off its ALI business. What is that, you ask, and what does it mean for longtime Smart[Plant] users?

As it is right now, Hexagon is a conglomerate that sells many different products and services to many types of users. In 2024, total revenue was EU 5.4 billion, essentially flat with 2023 as reported and up 1% on a constant currency, organic basis. It’s not small, but it is quite fragmented.

You may be most familiar with Hexagon’s Manufacturing Intelligence business, which sells into aerospace, automotive and similar verticals, with software from fka MSC Software and fka Vero, metrology software and hardware, among many other things. In Q2, the company expects to close its acquisition of Geomagic, which will bring it sophisticated capabilities to create 3D models from laser scans, among other types of data.

But if you’re a plant design person, the division you likely know about is Asset Lifecycle Intelligence or ALI. ALI was created after Hexagon acquired Intergraph, makers of PDS (ancient history) and SmartPlant, SmartMarine, and many other products around that core. In 2024, ALI reported revenue of EU 832 million, up 6% for the year (so well ahead of average for the group). A couple of quick breakdowns: 25% of revenue was from oil and gas customers, 9% from chemicals, and 18% from heavy construction (by which they mean industrial facilities, not roads). 45% of revenue was from the Americas, 31% from EMEA and 24% from APAC.

Hexagon has been acquiring assets to fill out its ALI offering, perhaps most notably, Infor EAM assets. EAM stands for Enterprise Asset Management, processes and technologies that enable businesses to manage the lifecycle of their physical assets. It typically includes asset databases, manages maintenance strategies, schedules activities, and creates and manages work orders. EAMs analyze the performance of assets, optimize their use, and let owners manage the tradeoffs between the cost of maintenance and the risk of an asset failure. 

What does this have to do with spinning off ALI?

Hexagon today said that its board of directors has decided to spin off and take public the ALI division and a number of other businesses, which it is calling NewCo for the moment. As previously disclosed, NewCo will include ETQ (today part of the Manufacturing Intelligence division) and Bricsys (currently in the Geosystems division). Bricsys makes sense as part of NewCo: BricscCAD runs on Mac, Linux, and Windows; is for mechanical and BIM-types of workflows and complements the Smart product set. ETQ I can sort of see as part of NewCo: its manufacturing quality management system (QMS) tracks, reports, and manages compliance, and has other functions around quality processes. The combination of design, engineering, asset analytics and operations is a powerful offer for the industries targeted by ALI/newCo.

But hang on: “Hexagon has expanded the expected perimeter of NewCo to include the remainder of Hexagon’s Safety, Infrastructure & Geospatial (“SIG”) division, as opposed to solely the Utilities & Infrastructure business within SIG, as was previously communicated.” As we’ve seen from Bentley, there’s some commonality between different utility types but I’m not sure that 911 call center technology, census management and the other assets SIG brings make sense in an ALI context. Yes, software companies can do many things for many types of users, but an IPO is all about a cohesive story. What do you do, why do you do it, and who will pay for that? Adding SIG the NewCo mix means Hexagon is essentially recreating Intergraph, which operated in two divisions: PPM (Process Power and Marine) and SGI (Safety, Government, and Infrastructure). They had little in common when it came to go-to-market, customer type, technology platforms, etc. and, to be honest, were ripe for takeover by Hexagon or other parties who might have split the divisions into separate entities.

We’ll have to see how Hexagon explain this to investors. Today’s announcement said that NewCo, “Reflecting the geographical focus of NewCo’s business, Intergraph’s heritage as a U.S. public company and the location of its management team,” is likely to be listed on a US-based exchange, with mechanisms on the Stockholm Nasdaq for existing shareholders who want to participate in NewCo’s IPO. Hexagon said it’s looking at  “early 2026” for the lPO if “the circumstances are right.”

What does this mean to current ALI customers? Absolutely nothing at this point. Keep doing what you do, using the tools you use. I haven’t heard of any employees leaving, release schedule changes, or anything else that could cause concern. 

And what does it mean for Hexagon’s MI customers? Even less since nothing is changing for the majority of product — unless you use ETQ. In that case, you might be dealing with a new vendor after the NewCo IPO. But I’m sure Hexagon will have a transition mechanism to smooth that transition since they very much want to keep your business.

Hexagon will have to start selling this spin-off concept to investors, employees, customers, and prospects, and it appears to have already begun. In today’s press release, the company said, “NewCo will be a pureplay software and SaaS company, offering comprehensive asset lifecycle intelligence, safety, infrastructure, and geospatial capabilities for a wide array of industries … NewCo will help customers plan, operate, and maintain assets more effectively, enabling clearer insights and better incident response. As a standalone company, NewCo will also have increased flexibility to pursue its distinct operating strategy, accelerate a SaaS transition and shift to recurring revenues, and establish a separate currency for future M&A.” Sounds promising.