Tropus made it into business by the slimmest of margins – and is now worth £20m
This month Tropus is confidently expecting to receive planning permission for its lastest scheme. The £250m Yes! project will be the first extreme sports leisure facility in Europe. “It’s such an achievement and landmark for us; it’s one of a kind,” says Graham Farrer.
However, the future for the multidisciplinary consultant was not always so rosy. After an unsuccessful merger with McBains Cooper, directors Farrer and David Hudson wanted to take the consultant in a different direction, and incorporate PFI into its portfolio.
Farrer and Hudson eventually got their separate company, but only after a messy demerger in 1996 that meant the two spent the first year of Tropus’ life in and out of a courtroom.
“It was the most stressful experience of my life,” says Hudson. Farrer adds: “If we’d lost, the business would’ve collapsed. We didn’t have the rights to anything.”
Three working days before the hearing, the partners were told that they needed £120,000 of cleared funds in their bank accounts by the time the case went to court as a deposit for the lawyers.
“We didn’t have that sort of money and so we spent the weekend trying to scrape it together,” says Farrer. “We put £20,000 across as many credit cards as possible, borrowed money from friends and family, went into overdrafts and whatever else we could.”
To their great relief Tropus won the case and, 10 years on, things look much better. When it was set up in 1995, it had £155,000 of share capital and £250,000 in equity. It now has a net asset value of £20m and there are no plans to stop there.
“We’ve reached this level in a relatively short time and we’ve been growing on average by about £2m a year since setting up,” says Hudson.
If we had lost, the whole business would have collapsed. We didn’t have the rights to anything at all
Graham Farrer
“The target is to reach £100m within the next four years. I think the first £20m has been the toughest. It becomes a lot easier after that as the more money you have, the more you can make. There is a multiplying effect.”
Tropus specialises in leisure and retail and covers a range of disciplines, from project management to architecture. In 1999 it set up Guildhouse to specialise in PFI and PPP.
Hudson is Guildhouse’s managing director: “One of the main reasons we branched away from McBains was because we could see a chance in PFI and wanted to become involved,” he says. “It made sense to separate our work in this area so we could focus on it.”
Guildhouse started out working on small PFIs worth about £2m, and built up from there. It is now working on four NHS Lift projects with a combined value of £400m, and was shortlisted for five out of the eight schemes in wave four of the Lift programme.
Tropus has also been appointed to design meeting rooms for the five-star Chester Grosvenor and Spa Hotel in London and to project manage the relocation and redevelopment of the £180m Barnsley Markets development.
Hudson and Farrer say building up contacts and taking on good jobs have been the keys to their success. But they are quick to add that no matter how desperate for work they have been, they have never worked on projects they have not had faith in.
In 2001 they walked away from their role as project manager on Wembley – a decision that cost them £3m. The pair admit that leaving a project as big as Wembley felt risky at the time, but now they are sure the decision was the right one. “We look at how things have turned out there and we thank God we left when we did,” says Farrer.
This decision was later vindicated by a report conducted by the Department for Culture, Media and Sport, which found that “thorough and independent review has confirmed grave deficiencies in relation to the substantive issues that Tropus alone brought to the attention of the WNSL Board”.
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