MSC Income Fund Announces Strategic Investment and Successful Exit in Portfolio Companies
Overview of Recent Developments
MSC Income Fund, Inc. (NYSE: MSIF) has made significant strides in its investment strategy by providing $12.7 million in financing to UBM ParentCo, LLC, which operates as United Business Mail ("UBM"). This funding is aimed at facilitating the merger of UBM with Mystic Logistics Holdings, LLC ("Mystic"), a pivotal move that reflects the Fund's robust portfolio management approach. Through this transaction, MSC Income has exited its previous investments in Mystic while taking on the role of a lender and minority equity stakeholder in UBM, partnering with Main Street Capital Corporation (NYSE: MAIN).
Details of the Investment and Exit
The transaction with UBM includes a combination of first lien, senior secured term debt, and direct minority equity. UBM stands out as a premier provider of marketing mail commingle services, focusing on optimizing efficiency in postage, transportation, and delivery for large-scale mailers. This strategic alliance is designed to enhance service offerings and improve operational performance.
Mystic, which specializes in marketing mail consolidation and logistics solutions, played a significant role in this transaction. Since MSC Income’s initial investment in Mystic during August 2014, which included a $2.5 million senior secured loan and $0.7 million in equity, the company has shown robust growth and has solidified its market presence.
Financial Performance and Returns
As a result of its exit from Mystic, MSC Income realized a gain of $6.0 million from its equity investment, complemented by total dividends received amounting to $5.5 million over the investment period. Collectively, these factors yield a remarkable annual internal rate of return (IRR) of 32.9% on the equity investment in Mystic.
Including both debt and equity investments in Mystic, MSC Income reported an impressive cumulative IRR of 22.9% and a 5.1 times money invested (TMI) return. These figures underscore the effectiveness of MSC Income's investment strategy and its ability to deliver substantial returns to its stakeholders.
About MSC Income Fund
MSC Income Fund is positioned as a principal investment firm, dedicated to providing debt capital primarily to private companies, especially those undergoing acquisitions or investments by private equity funds. Its diverse portfolio strategies encompass leveraged buyouts, recapitalizations, growth financings, and refinancings, focusing on the lower middle market with companies generating annual revenues typically between $10 million and $500 million.
About MSC Adviser I, LLC
MSC Adviser I, LLC ("MSCA") functions as the investment adviser and administrator for MSC Income Fund, providing essential support and expertise in investment management.