Why would a U.S. State give away almost a $100 million in incentives to Ray Dalio’s Bridgewater Associates, one of the world’s most successful hedge funds that managed 78 billion in assets? Moreover, those ‘incentives’ include a “forgivable” 10-year loan at 1 percent to Bridgewater Associates to help finance its two new buildings.
According to this report in FINalternatives, Connecticut Governor Dannel Malloy took to Bloomberg Television to explain and defend his decision.
The background to the decision was the need of Bridgewater Associates to move its 1225 employees, presently located across four different buildings in Westport, to one premises. According to Malloy, the firm had options to locate the new headquarters in Westchester, New York City, New Jersey, or Connecticut.
He takes credit for the fact that he was able to “entice” Bridgewater into locating to Stamford, Connecticut – the plus factors were its proximity to Grand Central (46 minutes by train), and access to many towns and stations along the way.
According to Malloy, the incentives he offered helped swing the deal in favor of Connecticut, with the result that a huge number of very high paying jobs would remain or relocate to the state. In addition, the state would benefit from the $750 million that Bridgewater would spend on the new state-of-the-art buildings of approximately 700,000 sq ft.
According to Malloy, Connecticut was competing for job creation, and he was tired of his state losing all the time, and had decided to change the approach.
His initiatives earned the net result of a deal that was “a home run for us.”
But why a loan at 1% to such a wealthy firm – isn’t that a tax payer subsidy?
The answer, according to Malloy, is simply because “they can borrow at 2 percent,” and that it’s the reality of the market place.
Read about Ray Dalio and his hedge fund Bridgewater Associates on ValueWalk here.