MSC Income Fund Announces Proposed Public Offering

Rhea-AI Summary

MSC Income Fund has announced a public offering of 4,850,000 shares of its common stock, with an expected price of $15.53 per share. The company plans to list on the NYSE under the symbol 'MSIF' and may grant underwriters an option for an additional 727,500 shares to cover over-allotments.

The net proceeds will initially be used to repay outstanding debt under credit facilities. Through re-borrowing, funds will support investments aligned with company strategies, operating expenses, and general corporate purposes. The offering's completion depends on market conditions, with no guaranteed timeline or terms.

RBC Capital Markets, Truist Securities, Raymond James, UBS Investment Bank, and Keefe, Bruyette & Woods are serving as joint book-running managers, with several other firms acting as co-managers. A registration statement has been filed with the SEC but is not yet effective.

Positive

• Potential to raise approximately $75.3 million (based on 4,850,000 shares at $15.53)
• Planned NYSE listing could improve stock liquidity and visibility
• Strong lineup of established financial institutions as underwriters

Negative

• Potential dilution for existing shareholders
• Offering proceeds primarily allocated to debt repayment rather than direct growth initiatives
• Uncertainty regarding completion timing and final terms

Insights

Financial Markets Analyst

This public offering announcement from MSC Income Fund represents a substantial capital raising initiative, with plans to offer 4,850,000 shares at an expected price of $15.53 per share, potentially raising approximately $75.3 million before considering the over-allotment option. The additional 727,500 shares in the over-allotment could bring the total raised to about $86.6 million.

The strategic decision to list on the NYSE under 'MSIF' suggests a move to enhance liquidity and visibility in the BDC (Business Development Company) space. The planned use of proceeds to initially repay credit facilities, followed by re-borrowing for new investments, indicates a refinancing strategy that could optimize the capital structure while maintaining investment flexibility.

The involvement of major underwriters like RBC Capital Markets, Truist Securities and Raymond James adds credibility to the offering. However, investors should note the offering is still pending SEC effectiveness and final terms could change based on market conditions.

Investment Strategist

The timing of this IPO is particularly interesting given the current market dynamics in the BDC sector. For retail investors, BDCs like MSC Income offer exposure to private market lending with typically higher yields than traditional fixed-income investments. The initial debt repayment strategy, followed by reinvestment, suggests a balanced approach to leverage management.

Three key considerations stand out:

• The pricing at $15.53 appears strategic, likely based on the fund's NAV and market comparables
• The size of the offering indicates confidence in market demand for BDC exposure
• The strong syndicate of underwriters suggests institutional interest in the offering

This offering could impact MAIN (Main Street Capital ) as both operate in similar markets, potentially creating competitive pressure in deal sourcing and pricing.

HOUSTON, Jan. 21, 2025 /PRNewswire/ -- MSC Income Fund, Inc. ("MSC Income" or the "Company"), an externally managed business development company, today announced that it has commenced a public offering of 4,850,000 shares of its common stock. The public offering price per share of the common stock is expected to be $15.53. MSC Income is expected to list its common stock on the New York Stock Exchange under the symbol "MSIF." MSC Income expects to grant the underwriters an option to purchase up to an additional 727,500 shares of common stock to cover over-allotments, if any. The completion of the proposed offering depends upon several factors, including market and other conditions, and there can be no assurance as to whether or when the proposed offering may be completed, or as to the actual size or terms of the proposed offering.

MSC Income intends to initially use all of the net proceeds from this offering to repay outstanding debt borrowed under its credit facilities, and then through re-borrowing under the credit facilities, to make investments in accordance with its investment objective and strategies, pay operating expenses and other cash obligations, and for general corporate purposes.

RBC Capital Markets, Truist Securities, Raymond James, UBS Investment Bank and Keefe, Bruyette & Woods, A Stifel Company, are acting as joint book-running managers for the offering. B. Riley Securities, Citizens JMP, Sanders Morris, Clear Street, Comerica Securities, Texas Capital Securities and Zions Capital Markets are acting as co-managers for the offering.

A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission (the "SEC") but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. No offer to buy the securities can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked by you without obligation or commitment of any kind, at any time prior to the time you receive notice of an acceptance of the offer given after the effective date.

Investors are advised to carefully consider the investment objectives, risks and charges and expenses of MSC Income before investing. The preliminary prospectus, dated January 21, 2025, contains this and other information about MSC Income and should be read carefully before investing. The information in the registration statement and preliminary prospectus is not complete and may be changed.

This press release will not constitute an offer to sell or the solicitation of an offer to buy the securities described above nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to their registration or qualification under the securities laws of any such state or jurisdiction. Offers of these securities are made only by means of the prospectus. The SEC has not approved or disapproved these securities or passed upon the adequacy of the preliminary prospectus. Any representation to the contrary is a criminal offense.

The offering of these securities will be made only by means of a preliminary prospectus forming part of the registration statement, copies of which may be obtained, when available, from: RBC Capital Markets, LLC, 200 Vesey Street, 8th Floor, New York, NY 10281-8098; Attention: Equity Syndicate; Phone: 877-822-4089; Email: equityprospectus@rbccm.com. 

ABOUT MSC INCOME FUND, INC.

The Company 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. The Company seeks to partner with entrepreneurs, business owners and management teams and generally provides customized "one-stop" debt and equity financing solutions within its lower middle market investment strategy. The Company's private loan portfolio companies generally have annual revenues between $25 million and $500 million. The Company's lower middle market portfolio companies generally have annual revenues between $10 million and $150 million.

ABOUT MSC ADVISER I, LLC

MSC Adviser I, LLC is a wholly owned subsidiary of Main Street Capital Corporation (NYSE: MAIN) that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended.  It currently manages investments for external parties, including the Company.

FORWARD-LOOKING STATEMENTS AND OTHER MATTERS

MSC Income cautions that statements in this press release which are forward-looking and provide other than historical information, including but not limited to the timing, size and other terms of the proposed offering and the anticipated use of the net proceeds from this offering, are based on current conditions and information available to MSC Income as of the date hereof. Although its management believes that the expectations reflected in those forward-looking statements are reasonable, MSC Income can give no assurance that those expectations will prove to be correct. Those forward-looking statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including, without limitation, such factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" included in MSC Income's filings with the Securities and Exchange Commission (the "SEC") (www.sec.gov). All forward-looking statements speak only as of the date of this communication. MSC Income undertakes no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations.

Contacts:
MSC Income Fund, Inc.
Dwayne L. Hyzak, CEO, dhyzak@mainstcapital.com 
Cory E. Gilbert, CFO, cgilbert@mainstcapital.com 
713-350-6000

View original content:https://www.prnewswire.com/news-releases/msc-income-fund-announces-proposed-public-offering-302356094.html

SOURCE MSC Income Fund, Inc.

FAQ

What is the size and price of MSC Income Fund's (MSIF) public offering?

MSC Income Fund is offering 4,850,000 shares at an expected price of $15.53 per share, with an additional over-allotment option of 727,500 shares.

How will MSC Income Fund use the proceeds from its 2025 public offering?

The company will initially use the proceeds to repay outstanding debt under credit facilities, then through re-borrowing, make investments, pay operating expenses, and fund general corporate purposes.

When will MSC Income Fund (MSIF) be listed on the NYSE?

The listing timing is dependent on market conditions and offering completion. The registration statement is still pending SEC effectiveness.

Who are the lead underwriters for MSC Income Fund's 2025 public offering?

RBC Capital Markets, Truist Securities, Raymond James, UBS Investment Bank, and Keefe, Bruyette & Woods are acting as joint book-running managers.

What is the total potential value of MSC Income Fund's 2025 offering including over-allotments?

Based on the expected price of $15.53, the offering could raise approximately $86.6 million if all shares including over-allotments (5,577,500 total shares) are sold.