Investors find returns in industrial conglomerates with digital divisions

London

INVESTMENT funds seeking to invest at the intersection of Europe and technology are finding rich pickings in places that some may find surprising: sprawling industrials such as trains-to-turbines Siemens and engineering group ABB.

Building on their traditional expertise in factory automation, the conglomerates' digital divisions are adding cutting edge software and systems that help customers design, build and test their products faster and more cheaply.

In so doing they bring new value to companies historically linked mainly to customers in the power, energy and mining sectors that have had to slash spending in the past few years due to a precipitous drop in commodity prices.

Not only is the divisions' growth outstripping that of legacy fossil fuel businesses, but a trend toward breaking out their earnings separately in company reports allows investors to see value that was previou…