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Money Management

Bridgewater shifting to partnership structure, expanding equity holders

Ray Dalio, Bridgewater Associates co-chairman

Bridgewater Associates announced it will move to a partnership structure, the next phase in a 10-year transition plan that will shift ownership to a much broader swath of the alternative investment manager's employees, said sources with knowledge of the plan.

Bridgewater shared the news with its 300 clients and investment consultants in a letter on Thursday.

Bridgewater spokeswoman Ryan FitzGibbon declined to comment or provide a copy of the letter.

The announcement came from the firm's three co-chief investment officers and majority owners of the firm: Raymond T. Dalio, the firm's founder and co-chairman, and Robert Prince and Greg Jensen.

"It seemed like a natural evolution," Mr. Dalio told Bloomberg during an interview Thursday.

Senior Bridgewater employees who now hold "phantom" equity ownership in the firm, purchased through their bonuses, will become equity partners, said a source who spoke on condition of anonymity.

These individuals will "not only be economic owners but will be partially responsible for the governance of the firm and the direction of the organization moving forward," said the source.

The partnership structure remains to be finalized, said the source, but a small group of six seed partners — all senior executives of the firm — were selected by Messrs. Dalio, Jensen and Prince, and along with 50 "provisional" partners will decide the final structure and direction of the partnership.

As of last year, the rest of the firm was controlled mostly by about 200 employees. Institutions including the $151.4 billion Texas Teacher Retirement System, Austin, the C$95 billion ($71.6 billion) Ontario Municipal Employees Retirement System, Toronto, and Singapore's sovereign wealth fund own minority stakes.

A consultant who read the letter said Bridgewater's move to expand employee ownership of the company is a positive move.

"It's preferable to the firm selling more of its equity to external stakeholders," the source said.

Regardless of the extent of equity ownership and who holds it, Mr. Dalio stressed to Bloomberg that "we will never, never, never be a public company."

Mr. Dalio has been steadily handing over control of the firm in the past few years.

He stepped down as co-CEO in the first quarter of 2017 and retained co-CIO and co-chairman roles. He was replaced as co-CEO by David McCormick, who previously served as president.

"As I love markets, I'm excited about this change and expect to remain a professional investor at Bridgewater until I die or until those running Bridgewater don't want me anymore," Mr. Dalio said in the 2017 client letter.

Bridgewater manages $164 billion for an institutional clientele.

Bloomberg contributed to this story.