Allen family office spinoff looks to grow through direct lending

Cercano Management, an investment firm that was once part of Paul Allen’s family office, is reportedly moving into direct lending as a growth strategy, hiring three people to help that effort.

A Bloomberg article said that Cercano sees direct lending as the most promising growth area for 2023. This is sourced to unnamed people with “knowledge of the matter”. Cercano did not respond to requests for comment from Private Debt Investor.

A Form ADV filing with the US Securities and Exchange Commission stipulates that all strategies Cercano employs are global, “incorporating investments in the US and around the world”, though it is prepared for clients to “elect to have an account with a narrower regional focus”. The reference to “all strategies” explicitly includes a private credit strategy. “In conjunction with [its] asset allocation service, the adviser manages a venture capital strategy, public equity strategy, a private equity strategy, a private credit strategy, and an LP fund strategy,” the document says.

The family office spun off Vulcan Capital, as Cercano was formerly known, less than two years ago.

Cercano, incorporated in the State of Washington, is headquartered in Bellevue. Its name means “nearby” in Spanish and, appropriately, Cercano has never strayed far from its Microsoft-spawned origin. Paul Allen, who died in 2018, co-founded Microsoft with Bill Gates in 1975, and retired from its board of directors in 2000.

According to the SEC filing, clients need $100 million to establish an account with Cercano. The filing also says that, as of 1 January 2022, the company had assets under management of more than $8 billion on a discretionary basis, and it did not manage any assets on a non-discretionary basis.

Cercano’s website says it provides its services to high-net-worth individuals as well as to “their family foundations, charitable organisations and other related entities”.

The firm has a robust portfolio including public equities. According to a 13F filed in mid-February, at the end of 2022 Cercano held $408 million in Microsoft stock. It also had large holdings in other information technology stocks including Apple and Alphabet, as well as substantial holdings in the transport industries (Union Pacific) and finance (Charles Schwab, BlackRock, Brookfield).

Chris Orndorff heads Cercano. Its general counsel and chief compliance officer is Sandy Choi, formerly, per her LinkedIn profile, of Guggenheim Partners.