The $109 billion Teacher Retirement System of Texas, Austin, has taken a non-voting equity stake in Bridgewater Associates LP, part of a 10-year plan by the manager to dilute the stake held by founder Raymond T. Dalio, president and co-chief investment officer.
Trustees on Feb. 16 approved a $250 million investment in privately held Bridgewater, for which the pension fund will receive a share of Bridgewater's profits through the ownership stake, according to a webcast.
The investment is Texas Teachers' first private investment in a money manager, according to a spokeswoman for the pension fund.
Texas Teachers is a Bridgewater client. A fund spokesman could not say the size of the fund's allocations to Bridgewater investment strategies.
Another Bridgewater institutional client has a stake in the firm, but Robert Prince, a Bridgewater co-CIO, would neither identify the client nor give the size of the investment.
During an executive session of the fund's Feb. 16 board meeting, Mr. Prince presented Bridgewater's proposal for Texas Teachers to take a stake in the company. Bridgewater executives “very selectively” approached a small number of institutional clients about investing in the firm, he said in an interview.
Mr. Prince said negotiations with a third institutional client of the firm, which he said he could not name, are close to being completed. He added company officials are unlikely to seek additional clients as financiers.
Mr. Prince declined to say how much in total financing Bridgewater is seeking from its client-investors. He did say the money will form “a capital base for the company” that will be used primarily for technology and other capital investments and for liquidity purposes.
Mr. Dalio founded Bridgewater in 1975 “out of a two-bedroom apartment,” according to the firm's website. About four years ago, he began to gradually reduce his ownership stake and management responsibilities to concentrate more on “what he really loves — markets and managing money,” Mr. Prince said.
So far, Bridgewater has built up its management team and has been “evening out the company ownership” through an employee equity purchase program.
The goal of the transition plan is to “build a company that is employee owned and employee controlled,” Mr. Prince added.