Innova Capital’s Kulig: Unexpected offers signalled high interest in Inelo

Inelo provides integrated IT services for heavy-duty transport in the CEE region.

In late October, Warsaw-based Innova Capital announced it had reached an agreement to sell a 100 percent stake in Inelo Group to Eurowag in a deal worth in excess of €300 million. During its four-year holding period, Innova introduced operational and management changes and consolidated Inelo’s product offering to create a “unique” product for the transport, shipping and logistics sectors, senior partner Krzysztof Kulig told PE Hub Europe in a wide-ranging interview about the transaction and trends.

Prague-based Eurowag, a pan-European integrated payments and mobility platform focused on the commercial road transportation industry, wasn’t the only interested party in Inelo. “Towards the end of last year, we got a bunch of unsolicited approaches – offers from both financial and strategic investors,” Kulig said. “That meant that the market was quite interesting for an exit.”

Krzysztof Kulig, Innova Capital

Inelo, headquartered in Bielsko-Biała, Poland, provides integrated IT services for heavy-duty transport in the CEE region. The company’s product offering includes driver time analysis and calculation software and GPS satellite location software to aid driver vehicle tracking, routing, and vehicle monitoring.

“We basically took these products and bundled them together in order to secure customer loyalty,” Kulig said.

Inelo’s management saw significant changes under Innova’s wing. Most of the team, including the CEO and CFO, was changed. (An exception was the vice president of sales.) “Inelo was very entrepreneurial, they barely even had a budget to operate on. So, we brought in a lot of processes and know-how,” Kulig explained.

Operational improvement, which Innova refers to as “making good companies great”, included understanding Inelo’s clients and processes better. Innova tackled segmentation, pricing policies, churn management, which, according to Kulig, is very important in Inelo’s business.

As for M&A, Inelo completed four strategic acquisitions during the hold period: NUSS, Marcos Bis, CVS Mobile and FireTMS. The add-on companies are headquartered in Leszno, Poland, Katowice, Poland, Ljubljana, Slovenia and Rybnik, Poland respectively.

By buying the Slovenian CVS, Inelo roughly doubled its number of clients, according to Kulig. The three other businesses contributed mostly to Inelo’s product offering.

Withstanding tests 

Having acquired Inelo in 2018, the last couple of years of Innova’s ownership period were tested by the pandemic. “The biggest unknown we had was the lockdown during covid,” Kulig said. “We didn’t know how the logistics and transportation market would react.”

After the initial shock, Innova realised that since everything was moving online, ecommerce would thrive. That meant good news for the logistics sector. Naturally, it wasn’t all positive. “We did a lot of cost optimization initiatives, including lowering salaries for people – we decided to not fire people,” Kulig explained. “Instead, we asked everybody to take a cut into their salary.”

Towards the end of the ownership period, another crisis hit, the war in Ukraine. As with covid, the effect on Innova’s operations wasn’t severe. Most of our companies didn’t have any exposure on the eastern Polish border,” Kulig said. “Most of the businesses we own, which are export oriented, are oriented towards Germany, EU and US.”

Moving forward

The firm held a first close of its seventh fund over the summer. The vehicle targets €350 million, and it will follow the strategy of its predecessor.

“One area we will continue to focus on is technology,” Kulig said. “We very much like to invest in business outsourcing, IT and B2B. There’s a lot of IT talent in Central Europe, which we can capitalise on.”