Grocon chief executive Daniel Grollo. Picture: Stuart McEvoy
The storied Grocon construction empire is once again being pushed to its financial limits with the company dogged by a dispute at a building site in Melbourne’s inner-city suburb of Collingwood.
The Grollo-led company is not wrestling with its traditional foes in the union movement, but is in a commercial dispute over payments on the site, where the Liberman family’s Impact Investment Group is developing an office project, over subcontractors owed up to $8m.
The near-complete building has been stalled as Grocon, which is on a fixed-price contract, reportedly pushed Impact to pay subcontractors to get the site moving again. But Impact investors have considered terminating Grocon and finding another builder as it deals with its financial woes.
The dispute is but the latest to cast a shadow over the Grocon name as the famed private company makes a messy shift away from the gritty construction industry that was the foundation of the Grollo family’s fortune.
The Grollo family is synonymous with the construction sector in Melbourne, building such buildings such as the Rialto Tower, Crown casino complex and dozens of others.
Bruno and his brother Rino’s father Luigi had arrived in Australia from Italy in 1928, starting his own concreting business in the 1940s with a small team of workers and one truck.
Grocon went on to become one of the largest and most successful construction groups over the next 50 years. The Rialto made their name and legend has it that given its status as the then highest tower in Australia and its floor-to-ceiling windows, Bruno Grollo allayed concerns from a group of prospective tenants by running at full speed at a window and bouncing back harmlessly.
Bruno would retire in 1999 and leave son Daniel at the helm of Grocon, though Bruno — who lives in a huge family compound in the northern Melbourne suburb of Thornbury called Casa del Matto (House of the Madman) — would retain ownership.
A year later he and Rino would divide the family business, which was turning over up to $800m annually.
Bruno and Daniel would retain Grocon while Rino and wife Diana would take the more passive assets such as the family’s half share in the Rialto tower.
That has underpinned their wealth since and they have since added other assets to their Grollo Group, including Mount Buller ski resort and their own property developer and asset manager, Equiset.
Daniel Grollo, meanwhile, was left in charge of Grocon, having split other family assets with his siblings in the past decade. Under the hand of this third-generation boss, the company has jumped into developing build-to-rent unit projects, with the backing of Singapore’s Government Investment Corporation.
But the shift has been marred by often bitter disputes with big landlords including Dexus, GPT and APN.
Grocon has most recently been weighed down by what its own legal counsel described as a David and Goliath-style legal battle against the NSW government over $270m in lost opportunities it claims to have suffered on the multi-billion-dollar central Barangaroo precinct.
Just last month Grocon made filings with the corporate regulator, saying that annual solvency resolutions had not been passed.
The company complained it had been pushed to the brink over its treatment by state body Infrastructure NSW, the successor of the Barangaroo Development Authority.
Grocon says it was put in a precarious position after a court case found that views by Crown Resorts and development giant Lendlease were protected, crimping its own project.
Grocon is suing the NSW government, claiming it was mistreated and then forced to sell out at a deep discount to Chinese-backed Aqualand.
Grocon said work was “continuing” on its project at Collingwood, although COVID-19 had “slowed” the project’s completion.
The company has privately rebuffed rumours in insolvency circles that administrators would be called into the Collingwood project in what would have served as a reminder of strife it found last year.
Grocon engaged in a legal dispute with listed heavyweight Dexus that almost saw two of its units liquidated. Administrator FTI Consulting said Grocon had traded insolvent, although Mr Grollo denied the claim, and a deed of company arrangement was struck and the developer went back to expanding its build-to-rent operation.
All these troubles are a world away from the company’s once powerful reputation and even plans just seven years ago, when Grocon teamed with the asset management arm of investment bank UBS to announce plans to create a $10bn alliance that would have propelled it to the top ranks of Australian property investment management.
But heavy losses on Queensland projects have hurt it and Grocon has also been dogged by its exit from The Ribbon project in Sydney’s Darling Harbour, where Chinese backer Greaton snapped up the development and construction rights this year.
Talk has swirled that Grocon would bring in Multiplex to finish the project. But Grocon has privately denied problems in Sydney or other projects.
