Home Hedge Funds CT-based hedge fund giant Bridgewater pays back state loan

CT-based hedge fund giant Bridgewater pays back state loan


WESTPORT — Bridgewater Associates, one of the world’s largest hedge fund managers, recently ended its jobs-based incentives deal with the state, a decision that resulted in the firm paying off the approximately $6.5 million balance of a state loan and forgoing the possibility of earning $18 million in additional tax credits, CT Insider has learned. 

It was not immediately clear whether Westport-based Bridgewater’s decision to not pursue any additional funds through the state Department of Economic and Community Development’s (DECD) First Five Plus program was linked to its recently announced restructuring plan, which involves job cuts. The firm indicated, however, that it plans to stay in Connecticut, which is one of the world’s largest hubs for hedge fund managers.

“Bridgewater is proud to be based in Connecticut. We’ve called Connecticut home for over four decades, and we have no plans to relocate,” Sarah Fass, Bridgewater’s chief human resources officer, said in a written statement. “We made an agreement with the state to enter the program in 2016, and like many companies, our workforce and workplace has evolved significantly since that time. Even with these changes, we remain a strong supporter, contributor and advocate for Connecticut.”

Bridgewater did not make anyone available for an interview for this article.

Dated March 21 and signed by DECD Commissioner Alexandra Daum and Bridgewater CEO Nir Bar Dea, the termination agreement between Bridgewater and DECD concluded the deal that Bridgewater signed in 2016. Through the original pact, the firm became eligible to receive funds through First Five Plus, a program launched under former Gov. Dannel P. Malloy that has provided state subsidies to companies that meet goals for creating and retaining jobs. Bridgewater qualified for a $17 million loan, $5 million in grants and up to $30 million in tax credits.

The termination agreement includes the following terms:

  • Bridgewater will keep the $12 million in tax credits that it has earned, but it will forego the possibility of earning $18 million in additional tax credits.
  • Bridgewater will keep the $5 million in grants issued in 2018.
  • Bridgewater will keep the nearly $11 million it earned in loan forgiveness, which is essentially a conversion of that portion of the loan into a grant, for meeting certain job targets. It has paid back its approximately $6.5 million loan balance, which included a principal of about $6.16 million and about $360,000 in interest. 
  • Bridgewater may not relocate from Connecticut before May 16, 2026. If it violates this relocation clause, it could be declared in default and required to repay the grants, loan forgiveness earned and a penalty equating to 5 percent of the $22 million in loan and grant funding that it has received.  

Such relocation clauses were a standard part of DECD contracts enacted under previous administrations when upfront loans and grants were provided to businesses. For example, another firm that received First Five Plus funds, Alexion Pharmaceuticals, triggered the relocation clause in its contract with the relocation of its headquarters from New Haven to Boston. Alexion ended up repaying DECD about $28 million to cover the loan and grant funding that it received through First Five Plus, as well as a penalty and outstanding interest. 

“Bridgewater is a valued member of Connecticut’s business community that has had — and continues to have — a sizeable, positive impact on our economy,” Daum said in a written statement. “We feel this termination agreement strikes the right balance of protecting taxpayer funds while also recognizing the financial benefits the company has rightfully earned under its 2016 contract to date. We look forward to the company continuing to innovate and prosper in Connecticut for years to come.”

A hedge fund giant in transition 

It is not unprecedented for companies to voluntarily give up subsidies after making deals with DECD. Professional services firm Deloitte, for instance, qualified for First Five Plus funds. But it left the program in 2020 without receiving any subsidies, after concluding that it did not need that taxpayer-funded assistance to keep growing in Connecticut.

But Bridgewater’s decision raises more questions, in light of its recently announced restructuring plan. Bar Dea, the CEO, disclosed the organizational changes in an email on March 1 to employees and clients, shifts that he said were necessary to “align with our strategic direction.” He acknowledged that “we need to part ways with great teammates who have been on the journey with us,” but he did not specify the number of job losses. Bloomberg reported that the firm was eliminating about 100 jobs from a workforce of approximately 1,300 people.

During the past couple of years, the size of Bridgewater’s contingent appears to have declined significantly. Compared with the head count reported by Bloomberg, the firm had an average of 1,644 jobs in Connecticut at the end of 2020, according to DECD’s most-recent employment data for the firm.

Bridgewater did not respond to an inquiry from CT Insider about its current head count at its headquarters in the Nyala Farms complex, off Interstate 95’s Exit 18.

In addition to announcing the job cuts, Bar Dea also disclosed changes to the investment strategy of Bridgewater, whose clients include public and corporate pension funds, sovereign wealth funds, university endowments, charitable foundations, foreign governments and central banks. (Hedge fund managers invest in a range of assets that can include stocks, bonds, commodities, currencies, derivatives and real estate.)

Bridgewater has long ranked No. 1 in assets under management (AUM) among hedge fund managers, but it might no longer hold that distinction. It had $123.5 billion in AUM, as of Jan. 31, 2023, according to Preqin, one of the leading providers of financial services data. That was No. 2, behind a total of $138.4 billion in hedge fund AUM, as of Sept. 30, 2022, for the London-headquartered Man Group. In comparison, Bridgewater’s AUM totaled about $162 billion, as of Sept. 30, 2019; approximately $141 billion, as of Sept. 30, 2020; and about $153 billion, as of Feb. 28, 2022, according to Preqin. At all of those points, it still ranked No.1 in hedge fund AUM.  

Before the plan announced in March, Bridgewater had already undergone significant changes in the past couple of years. Among them, Bar Dea was promoted to co-CEO at the beginning of 2022 and subsequently became the sole CEO. 

Last year, founder Ray Dalio last year completed handing off control of the firm, which he founded in 1975. He is a longtime Greenwich resident and friendly with Gov. Ned Lamont, another longstanding Greenwich resident.

“I have the opportunity of seeing Gov. Lamont in action,” Dalio said last October at the Greenwich Economic Forum conference, which was also attended by Lamont. “I’ve seen, at a very nitty-gritty level, the various problems you (Lamont) dealt with in a moderate way. If there’s one thing that I really think our country needs, it’s a strong middle that is basically able to bring things together in the interests of the country… Thank you, Ned, for what you do.” 

While Connecticut remains a hedge fund hub, the downsizing at Bridgewater epitomize the state’s difficulty in creating jobs in financial services since the 2008 financial crisis. There were 114,700 positions in financial activities in Connecticut in April, down about 20 percent from the sector’s total of 144,500 in March 2008, which marked the all-time peak for payroll jobs in Connecticut, according to data from the state Department of Labor.

Source link

Previous articleChina Hedge Fund Loses Case Against Top Quant Who Joined Rival
Next articleCarta Platform Sees Texas VC Activity More Than Double in Q1, as California Slips » Dallas Innovates


Please enter your comment!
Please enter your name here