MSC Income Fund Announces Q4 2024 Activity, Updates Regarding Public Listing
MSC Income Fund Inc., a non-traded business development company formerly known as HMS Income Fund, reported fourth quarter 2024 activity as it anticipates the listing of its common stock on a national securities change.
During the fourth quarter of 2024, MSC Income originated new or increased commitments in its private loan portfolio of $29.1 million and funded total investments across its private loan portfolio with a cost basis totaling $29.5 million.
It supported $30.5 million in total lower middle market portfolio investments, which after a decrease in cost basis due to a realized loss on a lower middle market portfolio investment and return of equity invested capital resulted in a net increase of $16.4 million in the total cost basis of that portfolio; and a net decrease of $7.5 million in the total cost basis of the middle market investment portfolio.
In terms of new private loan commitments and investments during Q4, the fund supported $14.8 million in a first lien senior secured loan, $2.4 million in a first lien senior secured revolver, $2.4 million in a first lien senior secured delayed draw loan, and $0.5 million in equity to a distributor of maintenance and repair parts for the industrial, manufacturing and automotive end markets.
According to the fund, it also committed $2.3 million in a first lien senior secured loan, $0.5 million in a first lien senior secured revolver, and $0.7 million in a first lien senior secured delayed draw loan to a provider of janitorial services for the food distribution and grocery end markets.
As of Dec. 31, 2024, MSC Income’s private loan portfolio included total investments at cost of approximately $697.5 million across 84 unique companies. The private loan portfolio, as a percentage of cost, included 93.9% invested in first lien debt investments and 6.1% invested in equity investments or other securities.
MSC Income is a principal investment firm that primarily provides debt capital to private companies owned by or in the process of being acquired by a private equity fund and also provides customized long-term debt and equity capital solutions to lower middle market companies. The company’s portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. The company seeks to partner with private equity fund sponsors and primarily invests in secured debt investments within its private loan investment strategy.
As previously reported by The DI Wire, the fund’s stockholders voted and approved six proposals at a Dec. 11, 2024, meeting related to MSC Income’s opportunity to list MSC Income’s shares of common stock on a national securities exchange accompanied by a follow-on public offering. Primarily, the fund approved a new dividend reinvestment plan, or DRIP. The DRIP will allow registered stockholders to automatically reinvest their cash dividends into additional shares of the company’s common stock. The new DRIP, which will become effective upon the listing of the fund’s shares on a national securities exchange, is an “opt-out” plan, meaning that registered stockholders will automatically have their dividends reinvested unless they elect to receive them in cash.
Additionally, the fund announced that, pursuant to approval from its board of directors, it has effectuated a 2-for-1 reverse stock split. As a result, every two shares of its issued and outstanding common stock were converted into one share, without any change in the par value per share or the number of authorized shares of common stock.
According to the company, the previously announced quarterly dividend of $0.18 per share payable on Jan. 31, 2025, to stockholders of record as of Dec. 31, 2024, was adjusted to $0.36 per share commensurate with the reverse stock split.
MSC Income’s preliminary estimate of net asset value per share was updated from The DI Wire’s previous reporting as of Dec. 31, 2024, is $15.50 to $15.56, representing an increase of $0.12 to $0.18 per share, or 0.8% to 1.2% from the NAV per share of $15.38 as of Sept. 30, 2024. The estimated increase in NAV per share is primarily due to the net tax benefit recognized for the quarter and the net fair value increase on the investment portfolio resulting from the net unrealized appreciation, partially offset by net realized losses on portfolio investments.
MSC Income preliminarily estimates that investments on non-accrual status comprised 1.5% of the total investment portfolio at fair value and 5.6% at cost as of the end of 2024.
According to the fund, it expects shares to be approved for listing on the New York Stock Exchange under the symbol of MSIF sometime this year, subject to a notice of issuance.
Launched in 2012, the fund was previously advised by a Hines affiliate and sub-advised by an affiliate of Main Street Capital Corporation, a publicly traded BDC. In fall 2020, shareholders approved an advisory agreement to turn over sole advisement to Main Street. Now externally managed by a wholly owned subsidiary of Main Street, the BDC specializes in providing long-term debt and equity capital to lower middle-market and middle-market companies. Its portfolio investments have typically supported management buyouts, recapitalizations, growth financings, refinancings, and acquisitions of companies that operate in diverse industry sectors.
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