Bridgewater to Spend $750 Million on New Offices

There are hedge funds, and then there is Bridgewater Associates.

If its assets, which at $130 billion more than double the size of its closest competitor, were not enough to set it apart from the rest of the industry, then a new $750 million headquarters on the Connecticut waterfront certainly will.

On Wednesday, Governor Dannel P. Malloy of Connecticut announced that the asset manager would be constructing a state-of-the-art facility along the Stamford waterfront as part of an economic and community development initiative. As part of the program, which will give the firm as much as $115 million in incentives as part of the deal, Bridgewater has also promised to add another 750 to 1,000 new high-level jobs to its current staff of 1,225.

“For a long time, our state failed to compete for the kinds of good paying jobs with good benefits that will grow and sustain our economy,” Governor Malloy said. “To have a company of Bridgewater's stature make th e business decision to invest $750 million in our state and significantly increase its workforce is not only an extraordinary economic ‘win,' but signals to the rest of the world that Connecticut is strengthening its leadership position in the very competitive financial services sector.”

The move is an extraordinary one for a hedge fund, and is another example of Bridgewater's efforts to institutionalize itself. In addition to making top-level hires to diversify leadership at the firm, Bridgewater sold an ownership stake to a public pension fund in Texas in February to expand its ownership base. Both measures were aimed at creating a sustainable business for the future.

But such moves can be perilous. Hedge funds have notoriously fragile businesses. Several shut down last year after federal agents raided them as part of an insider trading investigation. Investment decisions go wrong and firms blow up â€" a lesson that numerous funds learned during the financi al crisis. And even in the absence of extraordinary circumstances, the business model is tough to sustain.

While major corporations with predictable business models have long taken advantage of tax breaks for new facilities and hiring, hedge funds are fragile businesses. Their profits depend on performance, and with markets caught in a state of uncertainty it's hard for any firm to know how much money it will make in a given year.

Bridgewater has managed to set itself apart on that front in recent years. During the last two years, it has notched some of the industry's biggest gains, even as competitors' returns flagged. And over the last 20 years, the firm has returned an average 15 percent a year to investors, placing it among the top of the industry.

“There's no guarantees on investments and there will always be some fluctuations in there, but Bridgewater's model has been proven successful fore more than 30 years,” said Ronald F. Angelo, Jr., the depu ty commissioner of the state's department of economic and community development. “The company obviously feels confident in their business model.”

The firm, led by its enigmatic founder, Ray Dalio, has taken heat in recent years for its peculiar culture. Mr. Dalio, a Harvard Business School graduate, is a disciple of radical transparency, a belief set founded on the pursuit of truth at all costs. Such honesty can be a tough pill to swallow, and has prompted some employees to depart the firm. Still, everyone is allowed to speak freely â€" midlevel employees can take upper management to task if they disagree with their thinking.

Former employees jokingly say the current offices, spread over five different buildings in Westport, Conn., evoke Big Brother. In the interest of transparency, overhead cameras tape employees throughout the day, for instance.

It is unclear what kind of surveillance the new facility, to be completed by 2017, will have.

The new offices will have about 750,000 square feet spread across two eco-friendly buildings that will front the water in the Harbor Point development area. Bridgewater has promised to clean up the contaminated site and reforest the area, creating a park-like campus for its employees with public access.

“We are pleased that the State of Connecticut shares our vision of creating a state of the art and environmentally sustainable office campus, while also restoring this key piece of natural waterfront property in Stamford,” Greg Jensen, co-chief executive of Bridgewater, said in a statement. “We look forward to transforming this industrial site into a spectacularly beautiful forested campus that will be seamlessly integrated into the natural surroundings. The proposed campus will house all of our employees and be designed to facilitate creativity, collaboration and help reinforce Bridgewater's distinct culture which has been so instrumental to our success.”