Bridgewater and AQR to keep state funds despite downsizing

Recent downsizing at the state’s two largest hedge funds would not immediately affect their tens of millions of dollars in taxpayer-funded subsidies.

Bridgewater Associates and AQR Capital Management— which together employ about 2,400 in the state — have announced, respectively, the in-place transfer of about 200 Stamford-based jobs to professional-services firm Genpact and a number of layoffs. But state officials said they would need more time to assess the changes’ impact on the funds allotted to the firms through First Five Plus, the state’s flagship corporate-development program, whose incentives on based on job creation and retention.

“In the normal course of business, we expect some ups and downs in overall headcount, so until their next job audits are due, there will be no impact on the assistance provided,” said Jim Watson, a spokesman for the state Department of Economic and Community Development. “Of course, if they fall short of their goals, the financial incentives will be reduced, according to the contracts.”

Westport-based Bridgewater has qualified for up to $30 million in tax credits, $5 million in grants and a $17 million loan.

Last year, it employed about 1,625 in the state, according to DECD.

Bridgewater’s approximately $163 billion in assets under management rank No. 1 among hedge funds worldwide, according to financial data-tracking firm Preqin.

AQR’s package from the state includes a $28 million loan and up to $7 million in grants.

Headquartered at 2 Greenwich Plaza in downtown Greenwich, it employs about 770 statewide.

Among Connecticutbased hedge funds, the firm’s approximately $114 billion in assets rank No. 2 after Bridgewater, according to Preqin.

First Five Plus kicked off in 2011, in then-Gov. Dannel P. Malloy’s first year in office.

The state has since allocated loans worth about

$248 million, grants totaling

$129 million and another

$141 million in tax credits to the 19 companies participat- ing in the program, according to DECD.

At the same time, the companies have cumulatively committed to investing about $2.9 billion of their own money in Connecticut operations.

First Five Plus firms have created about 4,900 jobs and retained about 30,000 positions, according to DECD. Between 2012 and 2021, those same businesses are expected to generate about $409 million in income tax and sales and use tax revenues, according to state projections.

As the program has grown, state development officials have tightened their criteria for investments.

In the first deal, Cigna secured terms that allowed the health-insurance giant to earn up to $71 million in state grants, tax credits and loans after relocating its corporate headquarters to Bloomfield from Philadelphia. But the company fell short of creating 600 jobs, so the state forgave only $10 million of the $15 million loan in its incentives package. Cigna subsequently repaid the state $5 million.

The state has since offered less generous incentives to more recent additions.

At the same time, lawmakers have sought more accountability. The Legislature passed legislation in 2017 that established annual reviews of First Five Plus’ performance by the Commerce, Finance and Appropriations committees.

The state could add one more company to First Five Plus, with a June 30 deadline to fill the last slot.

A new DECD commissioner, to be appointed by new Gov. Ned Lamont, would oversee subsequent changes. Commissioner Catherine Smith, who was appointed to the post in April 2011 by Malloy, plans to step down on Friday.

“As someone who comes from the business world, the governor is focused on job creation, rejuvenating Connecticut’s economy and has established a business advisory council for additional policy guidance,” said Maribel La Luz, a spokeswoman for Lamont. “It’s too early to comment specifically on the future of First Five, but he is looking forward to discussing the path forward with the agency’s leadership soon.”