- Connecticut was downgraded by both S&P and Fitch this month
- Firm to get $22 million to expand in Westport, Wilton, Norwalk
Bridgewater Associates LP, the world’s largest hedge fund, will receive $22 million in aid from Connecticut, which has been working to keep businesses from leaving the state.
The firm, led by billionaire Ray Dalio, was approved for a $5 million grant and a $17 million loan to expand in Westport, Wilton and Norwalk, according to minutes of the state bond commission’s meeting on Friday. The loan may be forgiven if Bridgewater, which manages about $150 billion, retains some 1,400 jobs and creates 750 new ones through 2021.
Connecticut was in direct competition with states including New York when talks over the funding began with Bridgewater in 2012, Democratic Governor Dannel Malloy said at the meeting. The company is receiving the assistance as hedge funds come under scrutiny from clients, including public pension funds, for charging hefty fees while delivering lackluster results.
“We were aware of specific campuses in other states we were competing with,” Malloy said. “I wish we didn’t compete that way, that dollars were not part of the competition, but the reality is that they are.”
The measure drew rebukes from State Representative Christopher Davis and Comptroller Kevin Lembo, who said Connecticut can’t afford to be “picking winners and losers” when its stagnant economy led to two credit downgrades this month. Davis told Malloy at the meeting that Bridgewater can afford the cost of the expansion without public funds and that it came to the state “as a lender of first resort.”
Connecticut is the wealthiest U.S. state, yet has had difficulty balancing budgets as its finance-based economy struggles to rebound from the last recession. Malloy has pushed through tax increases to fill the shortfalls, though he now warns of a “new economic reality” that must be addressed with spending cuts.
The state has turned to financial incentives to keep companies within its borders. It suffered a blow earlier this year when General Electric Co. announced it would move its headquarters to Boston, after residing in Fairfield since 1974. That came even after Malloy pulled back on a plan to raise business levies that led GE to look elsewhere.
Other financial companies have received loans like the one approved for Bridgewater. In October 2014, Connecticut extended through 2021 an agreement with UBS AG that gave the bank a $20 million loan that doesn’t have to be repaid if it keeps at least 2,000 employees in-state.
Bridgewater was founded by Dalio in 1975 from his two-bedroom apartment. Its Pure Alpha fund tumbled 6.7 percent in the first quarter of this year, according to a person familiar with the returns.
Dalio earned about $1.4 billion last year, according to Institutional Investor’s Alpha’s 2016 Rich List. He’s worth about $14.1 billion, ranking him the 60th richest person in the world, according to the Bloomberg Billionaires Index.