Shareholders of HMS Income Fund, a publicly registered non-traded business development company advised by a Hines affiliate and sub-advised by an affiliate of Main Street Capital Corporation, have approved a new advisory agreement where Main Street would become the sole adviser of the fund.
At the company’s reconvened annual meeting of shareholders, nearly 40.5 million shares voted in favor of the advisory agreement proposal, roughly 1.2 million shares voted against, and 1.7 million shares abstained.
In early July, the company filed a preliminary proxy statement with the SEC proposing a new advisory agreement where MSC Adviser, an affiliate of Main Street, will acquire substantially all of the assets of HMS Adviser, an affiliate of Hines, related to its management of HMS Income Fund.
Other terms include the resignations of Gregory Geib, Peter Shaper and Janice Walker from the board and the appointment of two new disinterested directors.
Main Street CEO Dwayne Hyzak will be appointed CEO and president, Brent Smith as chief financial officer and treasurer, and Jason Beauvais as senior vice president, general counsel and chief compliance officer.
The company’s name will also change from HMS Income Fund to MSC Income Fund Inc., and the annual asset management fee will be reduced from 2 percent to 1.75 percent.
Main Street has served as the BDC’s sub-adviser and been represented on the board since the company’s launch in 2012. The company plans to undertake a liquidity event between four to six years after the end of the fund’s capital raise and has been its considering options.
In July, HMS suspended distributions, citing impacts of the COVID-19 pandemic. Once regular distributions are reinstated, the fund plans to move from a quarterly distribution declaration to a monthly declaration “in order maintain flexibility to reinstate a distribution if and when market circumstances change.”
HMS Income Fund invests in and lends to a portfolio of small and mid-size companies throughout the United States and oversees a portfolio of approximately $1 billion of investments in 124 companies.
The company’s initial offering closed in December 2015 after raising approximately $601.2 million, including proceeds from the distribution reinvestment plan of approximately $22 million. The company’s second offering closed on September 2017 and raised approximately $242.2 million, including approximately $110.5 million in DRIP proceeds, as of March 31, 2020.