UPS United Parcel Service

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)

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