Cargus

Combining ambition and expertise to create Romania’s leading last-mile delivery specialist

 

Shifting the strategic focus to e-commerce requires relevant experience and digital investment to ensure success. The partnership with Cargus is bringing together MidEuropa’s country and sector expertise with experience in digital transformation to create a market leader best placed for future growth.

 

The relationship with Cargus started two years prior to the partnership, when MidEuropa approached the owners regarding a bilateral transaction. MidEuropa strongly believed that Cargus was uniquely positioned to benefit from the positive market dynamics in the last-mile delivery market: the firm was a leading player with scale and an extensive national infrastructure, operating in a market with a highly attractive growth trajectory of 20%+ per annum owing to development of e-commerce. Although the initial discussions in 2016 did not lead to a transaction, MidEuropa continued to monitor the company as well as the last-mile courier industry in Romania and CEE, which facilitated exclusive negotiations and the buy-out in 2018.  

An important pillar of the investment thesis was bringing in a management buy-in team led by an experienced CEO. His prior experience on the board of Cargus, as well as CEO role with another last-mile operator under private equity ownership, gave him an impressive mix of market knowledge as well as in-depth understanding of Cargus itself.

MidEuropa was able to demonstrate to the sellers, as well as incumbent and buy-in managers, very relevant experience of the last-mile and e-commerce ecosystems, primarily stemming from the successful investment in Allegro, as well as a deep understanding of the overall market dynamics of Romania from two previous investments in the country, Profi and Regina Maria. 

 

Achieving operational excellence and accelerating digital transformation

The first stage of the investment involved strengthening the core organisation of the Company, primarily through augmentation of the C-level and mid-level management teams. Alongside these key organisational changes, a complete overhaul of operating processes was implemented as well as significant investments (over €15m) in infrastructure and information technology improvements. These strategic priorities were supported by an enhanced marketing strategy, including a complete rebranding of the Company from Urgent Cargus to Cargus.

Establishing a digital transformation strategy was a key focus. MidEuropa introduced a senior technology adviser, as well as input from other portfolio company best practices to accelerate this journey. Key initiatives launched include contactless payments and PIN on glass solution (first courier in Romania), a complete overhaul of the courier app and PDA devices, upgrade and automation of customer experience and interactions, as well as migration of overall IT infrastructure to a cloud-native set-up. 

Another pillar of MidEuropa’s investment was repositioning Cargus’ focus towards the high-growth e-commerce sector, with a particular focus on standardised lower weight parcels. The Company achieved strategic partner status with leading Romanian e-commerce players, expanded its service offering with e-commerce fulfilment via strategic acquisition of QeOpS, a leading fulfilment provider in Romania, and also introduced a subscription service for SMEs. 

Through organisational changes, redefining of strategic priorities and investment in technology, Cargus has become the market leader in terms of quality and efficiency, which resulted in significant growth and margin improvement. Furthermore, by focussing on the higher growth market segments and introduction of innovative customer solutions, Cargus is ideally positioned to capture more than its fair share of future market growth.