(Bloomberg) -- Mindaugas Raila was selling frozen fish and hustling to pay his bills each month when a friend suggested he try his hand at trucking.

That moment almost three decades ago led him to build one of the world’s biggest transport fortunes with a fleet of more than 6,000 trucks. Now the founder of Girteka is facing his sternest test yet as a prolonged freight-rate downturn puts pressure on his empire.

With a full recovery not expected until next year, the Lithuanian native’s decision to shift his wealth during his industry’s boom years by building out a family office is increasingly buffering his financial pain.

Raila’s investments outside of Girteka and held through his private investment firm, Willgrow, make up almost half of his roughly $2.5 billion fortune, according to the Bloomberg Billionaires Index. The family office this year allocated to a $150 million fund for early-stage investor Audacious Ventures and is finalizing several similar deals, adding to existing investments through Blackstone Inc., Ares Management Corp. and CVC Capital Partners Plc.

“From the family wealth perspective, it was the right move,” Raila, 52, said in a recent interview. “We evolved from being a mono-business.”

Willgrow has an investment portfolio of more than $500 million derived from Girteka’s excess cash that’s now mostly tied up outside public markets, including buyout, venture capital and private debt funds. The Vilnius, Lithuania-based firm also oversees investments in logistics properties, where growth in prime rents has outstripped recent inflation surges, according to research from real estate broker Savills.

The freight recession for sea, land and air transport firms that began in 2022, meanwhile, has left Girteka facing its first annual growth slowdown in at least six years. During the pandemic, the closely held company’s net profit increased about six-fold amid supply-chain disruptions. It’s scheduled to release 2023 results in coming weeks.

Read More: US Truckers Hope to See End of Rough Patch for Freight

Unlike competitors such as DSV A/S and Kuehne + Nagel International AG, Girteka owns rather than leases its trucks, making it more sensitive to cargo-market swings. As a result of the downturn, the value of Raila’s majority stake in Girteka has dropped by at least 10% since hitting a high of more than $2 billion in recent years, according to Bloomberg’s wealth index.

Raila, a physics graduate, founded Girteka in 1996 with a second-hand truck after borrowing about $10,000 from friends and family. Lithuania had only recently regained independence from the Soviet Union, and Raila’s logistics venture rode the boom as his nation embraced free markets.

As Girteka expanded, Raila was quick to realize the value of reinvesting profits and implementing managerial strategies. He took inspiration from Winning, a 2005 book on business techniques by Jack Welch, the former chief executive officer of General Electric Co. By 2008, the company’s fleet had grown to 300 trucks, and has since expanded to about 6,500 operating across Europe, fueling revenue gains of more than 3,000% during that period.

“I consistently reinvested all of the profits,” said Raila, a married father of three who completed a Harvard Business School leadership program in 2020. “We are a good example that compounding works.”

Raila started building out Willgrow in 2016 when he hired former INVL Asset Management executive Tomas Krakauskas, who serves as the family office’s chief investment officer. It now has more than a dozen employees and advisers and also helps manage the wealth of former Girteka CEO Edvardas Liachovičius, who stepped down last year after more than a decade in the role. He holds a minority stake in the trucking company.

Private Markets

Willgrow’s portfolio includes CVC, Park Square and Ares private debt funds as well as another vehicle from Blackstone for real assets, a category of tangible investments such as buildings and timber, according to its website. The firm, which typically adds as many as 15 investments a year, is looking to increase allocations in the US after also putting money into a $300 million debut fund that closed in March for California-based venture firm Matter Venture Partners, according to Krakauskas.

“We could do more,” he said. “We try to be as selective as possible.”

Read More: Why Billionaires Have Family Offices and What They Do: QuickTake

Other logistics billionaires have followed a similar path in diversifying their wealth.

French shipping tycoon Rodolphe Saade has amassed a series of media assets, while Klaus-Michael Kühne, Germany’s richest person and the biggest shareholder of his namesake logistics company, boosted his stake last year in chemicals business Brenntag. They have combined net worths of $81.5 billion, according to Bloomberg’s wealth index.

Saade’s CMA warned this month of a decline in ocean freight rates as new vessel deliveries gather pace. Raila, however, said he thinks trucking rates have bottomed out and is increasingly optimistic about expanding his business empire through his family office.

“We are in a growing mode,” he said. “I feel we are just getting started.”

--With assistance from Jack Witzig and Tara Patel.

(Adds investment details in 13th paragraph.)

©2024 Bloomberg L.P.