Warburg Pincus Makes Investment in BlueGrace Logistics
August 09 2016 - 5:00PM
Dow Jones News
Private-equity firm Warburg Pincus has invested $255 million in
BlueGrace Logistics, a Tampa, Fla.-based firm that provides freight
services for shippers via an online software platform, the
companies said Tuesday.
The investment is one of the largest in a flurry of recent deals
involving what investors sometimes refer to as technology-enabled
logistics firms. Such companies are usually asset-light, meaning
that unlike trucking fleets or railroads, they don't own
transportation equipment.
Instead, these companies use software to help customers generate
business and save money on the shipping of consumer goods, raw
materials and other products. Venture-capital firms have invested
in dozens of mobile smartphone apps that help match truckers with
loads that need hauling, in what has been called the "Uber for
trucking" model.
BlueGrace, which was founded in 2009 by Bobby Harris, a former
loading dock worker from Tampa, offers similar freight-brokerage
services, but also helps shippers, including manufacturers,
consumer goods makers and others find the lowest price on
transportation services using software that sifts through multiple
offers and options for routes, costs and timing.
The company bills its service as a way of saving millions for
clients and offering more transparency into freight expenditures,
which many firms began to focus on after the financial crisis of
2008 to 2010.
"When the recession hit, everyone was looking at their books and
realizing, 'Wow, transportation is our second-biggest cost,'" Mr.
Harris said.
Shortly before launching BlueGrace, Mr. Harris hired Justin
Belcher, a former data engineer at Verizon Data Systems, as vice
president of technology. Last year, Mr. Belcher, who Mr. Harris
credited as instrumental in developing the company's software
platform, was promoted to Chief Information Officer.
"From the very first day, we made technology our very first
priority," Mr. Harris said. Since then, the freight services
industry has contracted, creating an opening for BlueGrace, Mr.
Harris said. "It took a lot of people off the playing field and
left the big players and those who had the best technology."
Warburg Pincus, which has been one of the highest-profile
private-equity firms to invest in logistics companies recently,
handled the investment out of its technology group. Alex Berzofsky,
a Warburg managing director who led the deal, said that the firm
expects companies like BlueGrace to produce higher returns than
typical transportation companies like trucking fleets.
In 2007, Warburg invested in Coyote Logistics, a Chicago startup
that offered freight-matching services to truckers with excess
capacity in their trucks. United Parcel Service Inc. bought Coyote
last year for $1.8 billion. Warburg was also an early investor in
New Breed Logistics Inc., which XPO Logistics Inc. bought in 2014
for $615 million.
"Obviously the transportation industry has been around for many,
many years, but it's only been in the last 10 to 15 years that
technology has made it more efficient," Mr. Berzofsky said.
"There's a flight towards companies that have really good
technology."
Warburg said that as a result of the transaction, it will become
a minority owner of BlueGrace, and said that some of the funds
invested will be used to fund acquisitions and an expansion of the
business.
Write to Robbie Whelan at robbie.whelan@wsj.com
(END) Dow Jones Newswires
August 09, 2016 16:45 ET (20:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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