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FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION | 3 Months Ended
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Mar. 31, 2025
Fair Value Disclosures [Abstract] |
FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION | FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. MSC Income accounts for its investments at fair value. Fair Value Hierarchy In accordance with ASC 820, MSC Income has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3). Investments recorded on MSC Income’s Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows: Level 1 — Investments whose values are based on unadjusted quoted prices for identical assets in an active market that MSC Income has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities). Level 2 — Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following: •Quoted prices for similar assets in active markets (for example, investments in restricted stock); •Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies); •Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and •Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment. Level 3 — Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment. As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). As of March 31, 2025 and December 31, 2024, MSC Income’s Private Loan portfolio investments primarily consisted of investments in secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income’s Private Loan portfolio investments were categorized as Level 3 as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, all of MSC Income’s LMM portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of MSC Income’s LMM portfolio investments were categorized as Level 3 as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, MSC Income’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income’s Middle Market portfolio investments were categorized as Level 3 as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, MSC Income’s Other Portfolio investments consisted of illiquid securities issued by privately held entities and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of MSC Income’s Other Portfolio investments were categorized as Level 3 as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, all money market funds included in cash and cash equivalents were valued using Level 1 inputs. The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs: •Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers; •Current and projected financial condition of the portfolio company; •Current and projected ability of the portfolio company to service its debt obligations; •Type and amount of collateral, if any, underlying the investment; •Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment; •Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio); •Pending debt or capital restructuring of the portfolio company; •Projected operating results of the portfolio company; •Current information regarding any offers to purchase the investment; •Current ability of the portfolio company to raise any additional financing as needed; •Changes in the economic environment which may have a material impact on the operating results of the portfolio company; •Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company; •Qualitative assessment of key management; •Contractual rights, obligations or restrictions associated with the investment; and •Other factors deemed relevant. The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of MSC Income’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement, and significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of MSC Income’s Private Loan, LMM and Middle Market debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below. The following tables provide a summary of the significant unobservable inputs used to fair value MSC Income’s Level 3 portfolio investments as of March 31, 2025 and December 31, 2024:
Type of Investment |  | Fair Value as of March 31, 2025 (in thousands) |  | Valuation Technique |  | Significant Unobservable Inputs |  | Range (3) |  | Weighted-Average (3)(4) |  | Median (3)
Equity investments |  | $ | 291,419 |  |  | Discounted cash flow |  | WACC |  | 11.3% - 22.3% |  | 14.7 | % |  | 15.0 | %
|  |  |  | Market comparable / Enterprise value |  | EBITDA multiple (1) |  | 5.0x - 8.5x (2) |  | 6.6x |  | 6.5x
Debt investments |  | $ | 964,554 |  |  | Discounted cash flow |  | Risk adjusted discount rate (5) |  | 8.9% - 15.8% (2) |  | 12.7 | % |  | 12.3 | %
|  |  |  |  |  | Expected principal recovery percentage |  | 0.3% - 500.0% |  | 99.9 | % |  | 100.0 | %
Debt investments |  | $ | 4,880 |  |  | Market approach |  | Third-party quote |  | 14.5 - 75.0 |  | 50.1 |  | 40.0
Total Level 3 investments |  | $ | 1,260,853 |  |  |  |  |  |  |  |  |  |  |
_____________________ (1)EBITDA may include proforma adjustments and/or other add-backs based on specific circumstances related to each investment. (2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 13.5x and the range for risk adjusted discount rate is 7.2% - 36.2%. (3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input. (4)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value. (5)Discount rate includes the effect of the standard SOFR base rate, as applicable.
Type of Investment |  | Fair Value as of December 31, 2024 (in thousands) |  | Valuation Technique |  | Significant Unobservable Inputs |  | Range (3) |  | Weighted-Average (3)(4) |  | Median (3)
Equity investments |  | $ | 281,831 |  |  | Discounted cash flow |  | WACC |  | 11.5% - 22.5% |  | 14.8 | % |  | 15.1 | %
|  |  |  | Market comparable / Enterprise value |  | EBITDA multiple (1) |  | 4.9x - 9.0x (2) |  | 6.6x |  | 6.5x
Debt investments |  | $ | 862,813 |  |  | Discounted cash flow |  | Risk adjusted discount rate (5) |  | 8.5% - 18.0% (2) |  | 13.2 | % |  | 12.1 | %
|  |  |  |  |  | Expected principal recovery percentage |  | 0.3% - 100.0% |  | 99.7 | % |  | 100.0 | %
Debt investments |  | $ | 32,863 |  |  | Market approach |  | Third-party quote |  | 21.0 - 99.4 |  | 82.9 |  | 84.5
Total Level 3 investments |  | $ | 1,177,507 |  |  |  |  |  |  |  |  |  |  |
_____________________ (1)EBITDA may include proforma adjustments and/or other add-backs based on specific circumstances related to each investment. (2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 17.0x and the range for risk adjusted discount rate is 6.8% - 38.3%. (3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input. (4)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value. (5)Discount rate includes the effect of the standard SOFR base rate, as applicable. The following tables provide a summary of changes in fair value of MSC Income’s Level 3 portfolio investments for the three months ended March 31, 2025 and 2024 (amounts in thousands):
Type of Investment |  | Fair Value as of December 31, 2024 |  | Transfers Into Level 3 Hierarchy |  | Redemptions/ Repayments |  | New Investments |  | Net Changes from Unrealized to Realized |  | Net Unrealized Appreciation (Depreciation) |  | Other (1) |  | Fair Value as of March 31, 2025
Debt |  | $ | 895,676 |  |  | $ | — |  |  | $ | (74,862) |  |  | $ | 144,667 |  |  | $ | 23,520 |  |  | $ | (7,955) |  |  | $ | (11,612) |  |  | $ | 969,434 |
Equity |  | 277,553 |  |  | — |  |  | (6,617) |  |  | 1,397 |  |  | (2,289) |  |  | 4,295 |  |  | 11,612 |  |  | 285,951 |
Equity Warrant |  | 4,278 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,190 |  |  | — |  |  | 5,468 |
|  | $ | 1,177,507 |  |  | $ | — |  |  | $ | (81,479) |  |  | $ | 146,064 |  |  | $ | 21,231 |  |  | $ | (2,470) |  |  | $ | — |  |  | $ | 1,260,853 |
______________________ (1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.
Type of Investment |  | Fair Value as of December 31, 2023 |  | Transfers Into Level 3 Hierarchy |  | Redemptions/ Repayments |  | New Investments |  | Net Changes from Unrealized to Realized |  | Net Unrealized Appreciation (Depreciation) |  | Other (1) |  | Fair Value as of March 31, 2024
Debt |  | $ | 838,125 |  |  | $ | — |  |  | $ | (50,999) |  |  | $ | 75,519 |  |  | $ | 884 |  |  | $ | (3,635) |  |  | $ | (166) |  |  | $ | 859,728 |
Equity |  | 254,029 |  |  | — |  |  | (3,324) |  |  | 3,025 |  |  | 673 |  |  | 1,053 |  |  | 166 |  |  | 255,622 |
Equity Warrant |  | 741 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (109) |  |  | — |  |  | 632 |
|  | $ | 1,092,895 |  |  | $ | — |  |  | $ | (54,323) |  |  | $ | 78,544 |  |  | $ | 1,557 |  |  | $ | (2,691) |  |  | $ | — |  |  | $ | 1,115,982 |
_____________________ (1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows. As of March 31, 2025 and December 31, 2024, MSC Income’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:
|  |  |  | Fair Value Measurements
|  |  |  | (in thousands)
As of March 31, 2025 |  | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Private Loan portfolio investments |  | $ | 767,780 |  |  | $ | — |  |  | $ | — |  |  | $ | 767,780 |
LMM portfolio investments |  | 439,689 |  |  | — |  |  | — |  |  | 439,689 |
Middle Market portfolio investments |  | 30,781 |  |  | — |  |  | — |  |  | 30,781 |
Other Portfolio investments |  | 22,603 |  |  | — |  |  | — |  |  | 22,603 |
Total investments |  | $ | 1,260,853 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,260,853 |
|  |  |  | Fair Value Measurements
|  |  |  | (in thousands)
As of December 31, 2024 |  | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Private Loan portfolio investments |  | $ | 677,878 |  |  | $ | — |  |  | $ | — |  |  | $ | 677,878 |
LMM portfolio investments |  | 436,150 |  |  | — |  |  | — |  |  | 436,150 |
Middle Market portfolio investments |  | 39,402 |  |  | — |  |  | — |  |  | 39,402 |
Other Portfolio investments |  | 24,077 |  |  | — |  |  | — |  |  | 24,077 |
Total investments |  | $ | 1,177,507 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,177,507 |
Investment Portfolio Composition MSC Income’s principal investment objective is to maximize its portfolio’s total return, primarily by generating current income from its debt investments and, to a lesser extent, by generating current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. MSC Income seeks to achieve its investment objective primarily by providing debt capital to companies in its Private Loan investment strategy and secondarily through its LMM investment portfolio. MSC Income’s Private Loan investment strategy is focused on investments in secured debt in privately held companies that generally have annual revenues between $25 million and $500 million, and its Private Loan investments generally range in size from $1 million to $30 million. MSC Income’s Private Loan investments primarily consist of debt securities that have primarily been originated directly by the Adviser or, to a lesser extent, through the Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. In both cases, MSC Income’s Private Loan investments are typically made in a company owned by or in the process of being acquired by a private equity fund. MSC Income’s Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. MSC Income may have the option to co-invest with Main Street and the private equity fund in the equity securities of its Private Loan portfolio companies. MSC Income maintains a LMM investment portfolio with investments in secured debt and equity investments in privately held, LMM companies based in the United States. MSC Income’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $1 million to $30 million. The LMM debt investments are typically secured by a first priority lien on the assets of the portfolio company, can include either fixed or floating interest rates and generally have a term of between five and seven years from the original investment date. MSC Income typically makes direct equity investments and/or receives nominally priced equity warrants in connection with a LMM portfolio company debt investment. In connection with the MSC Income Listing, the Company’s Board of Directors and the Adviser decided to change the Company’s investment strategy with respect to new platform investments to be solely focused on the Private Loan investment strategy. As a result, the size of the Company’s LMM investment portfolio is expected to decrease over time as existing LMM investments are repaid or sold in the ordinary course of business. The Company does, however, plan to continue executing follow-on investments in its existing LMM portfolio companies going forward in accordance with its existing SEC order for co-investment exemptive relief. MSC Income also maintains a legacy portfolio of investments in Middle Market companies. MSC Income’s Middle Market investments are generally debt investments in companies owned by a private equity fund that were originally issued through a syndication financing process. MSC Income has generally stopped making new Middle Market investments and expects the size of its Middle Market investment portfolio to continue to decline in future periods as its existing Middle Market investments are repaid or sold. MSC Income’s Middle Market debt investments generally range in size from $1 million to $20 million, are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date. MSC Income’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its Private Loan, LMM or Middle Market portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, MSC Income may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, MSC Income generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be realized over a five to ten-year period. Similar to its Middle Market investments, the Company has generally stopped making new Other Portfolio investments and expects its Other Portfolio to continue to decline in future periods as existing Other Portfolio investments are repaid or sold. Based upon MSC Income’s liquidity and capital structure management activities, MSC Income’s Investment Portfolio may also periodically include short-term portfolio investments that are atypical of MSC Income’s Private Loan and LMM portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be realized in one year or less. These short-term portfolio investments are not expected to be a significant portion of the overall Investment Portfolio. Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three months ended March 31, 2025 and 2024, MSC Income did not record investment income from any single portfolio company in excess of 10% of total investment income. The following tables provide a summary of MSC Income’s investments in the Private Loan and LMM portfolios as of March 31, 2025 and December 31, 2024 (this information excludes Middle Market and Other Portfolio investments, which are discussed further below).
| As of March 31, 2025
| Private Loan |  | LMM (a) |  |
| (dollars in millions)
Number of portfolio companies | 84 |  |  | 57 |  |  |
Fair value | $ | 767.8 |  |  | $ | 439.7 |  |  |
Cost | $ | 790.0 |  |  | $ | 356.3 |  |  |
Debt investments as a % of portfolio (at cost) | 93.5 | % |  | 67.7 | % |  |
Equity investments as a % of portfolio (at cost) | 6.5 | % |  | 32.3 | % |  |
% of debt investments at cost secured by first priority lien | 99.9 | % |  | 99.9 | % |  |
Weighted-average annual effective yield (b) | 11.6 | % |  | 13.1 | % |  |
Average EBITDA (c) | $ | 32.3 |  |  | $ | 11.0 |  |  |
___________________ (a)As of March 31, 2025, MSC Income had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of March 31, 2025, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of March 31, 2025. The weighted-average annual effective yield on MSC Income’s debt portfolio as of March 31, 2025, including debt investments on non-accrual status, was 10.9% for its Private Loan portfolio and 12.2% for its LMM portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect changes in the market value of MSC Income’s stock, MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. (c)The average EBITDA is calculated using a weighted-average for the Private Loan portfolio and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including four Private Loan portfolio companies and four LMM portfolio companies, as EBITDA is not a meaningful valuation metric for MSC Income’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains.
| As of December 31, 2024
| Private Loan |  | LMM (a) |  |
| (dollars in millions)
Number of portfolio companies | 84 |  |  | 57 |  |  |
Fair value | $ | 677.9 |  |  | $ | 436.1 |  |  |
Cost | $ | 697.5 |  |  | $ | 357.1 |  |  |
Debt investments as a % of portfolio (at cost) | 93.9 | % |  | 67.8 | % |  |
Equity investments as a % of portfolio (at cost) | 6.1 | % |  | 32.2 | % |  |
% of debt investments at cost secured by first priority lien | 99.9 | % |  | 99.9 | % |  |
Weighted-average annual effective yield (b) | 12.0 | % |  | 13.0 | % |  |
Average EBITDA (c) | $ | 28.6 |  |  | $ | 10.8 |  |  |
___________________ (a)As of December 31, 2024, MSC Income had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 31, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2024. The weighted-average annual effective yield on MSC Income’s debt portfolio as of December 31, 2024, including debt investments on non-accrual status, was 11.4% for its Private Loan portfolio and 12.2% for its LMM portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. (c)The average EBITDA is calculated using a weighted-average for the Private Loan portfolio and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including two Private Loan portfolio companies and three LMM portfolio companies, as EBITDA is not a meaningful valuation metric for MSC Income’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains. For the three months ended March 31, 2025 and 2024, MSC Income achieved an annualized total return on investments of 10.6% and 11.8%, respectively. For the year ended December 31, 2024, MSC Income achieved a total return on investments of 12.4%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. MSC Income’s total return on investments is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect changes in the market value of MSC Income’s stock, MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. As of March 31, 2025, MSC Income had Middle Market Portfolio investments in eight portfolio companies, collectively totaling $30.8 million in fair value and $40.6 million in cost basis, which comprised 2.4% and 3.4% of MSC Income’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2024, MSC Income had Middle Market Portfolio investments in ten portfolio companies, collectively totaling $39.4 million in fair value and $66.3 million in cost basis, which comprised 3.3% and 5.8% of MSC Income’s Investment Portfolio at fair value and cost, respectively. As of March 31, 2025, MSC Income had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $22.6 million in fair value and $16.5 million in cost basis, which comprised 1.8% and 1.4% of MSC Income’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2024, MSC Income had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.1 million in fair value and $17.9 million in cost basis, which comprised 2.0% and 1.6% of MSC Income’s Investment Portfolio at fair value and cost, respectively. The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments, as of March 31, 2025 and December 31, 2024 (this information excludes Other Portfolio investments, which are discussed above).
Cost: |  | March 31, 2025 |  | December 31, 2024
First lien debt |  | 85.4 | % |  | 85.2 | %
Equity |  | 14.4 |  |  | 14.5 |
Equity warrants |  | 0.2 |  |  | 0.3 |
Other |  | — |  |  | — |
|  | 100.0 | % |  | 100.0 | %
Fair Value: |  | March 31, 2025 |  | December 31, 2024
First lien debt |  | 78.3 | % |  | 77.6 | %
Equity |  | 21.3 |  |  | 22.0 |
Equity warrants |  | 0.4 |  |  | 0.4 |
Other |  | — |  |  | — |
|  | 100.0 | % |  | 100.0 | %
The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments, as of March 31, 2025 and December 31, 2024 (this information excludes Other Portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.
Cost: |  | March 31, 2025 |  | December 31, 2024
Northeast |  | 23.3 | % |  | 22.4 | %
Midwest |  | 22.3 |  |  | 21.5 |
Southwest |  | 20.5 |  |  | 18.2 |
West |  | 18.2 |  |  | 18.7 |
Southeast |  | 13.7 |  |  | 17.0 |
Canada |  | 1.1 |  |  | 1.2 |
Other Non-United States |  | 0.9 |  |  | 1.0 |
|  | 100.0 | % |  | 100.0 | %
Fair Value: |  | March 31, 2025 |  | December 31, 2024
Midwest |  | 23.3 | % |  | 22.7 | %
Southwest |  | 22.4 |  |  | 20.4 |
Northeast |  | 22.4 |  |  | 22.6 |
West |  | 18.1 |  |  | 18.4 |
Southeast |  | 11.9 |  |  | 13.8 |
Canada |  | 1.0 |  |  | 1.1 |
Other Non-United States |  | 0.9 |  |  | 1.0 |
|  | 100.0 | % |  | 100.0 | %
MSC Income’s Private Loan, LMM and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments by industry at cost and fair value as of March 31, 2025 and December 31, 2024 (this information excludes Other Portfolio investments).
Cost: |  | March 31, 2025 |  | December 31, 2024
Electrical Equipment |  | 7.3 | % |  | 4.6 | %
Machinery |  | 7.3 |  |  | 7.8 |
Commercial Services & Supplies |  | 7.2 |  |  | 7.6 |
Internet Software & Services |  | 6.3 |  |  | 7.2 |
Professional Services |  | 5.6 |  |  | 6.1 |
Containers & Packaging |  | 4.8 |  |  | 4.5 |
Diversified Consumer Services |  | 4.7 |  |  | 5.2 |
IT Services |  | 4.4 |  |  | 4.6 |
Distributors |  | 3.9 |  |  | 4.3 |
Health Care Providers & Services |  | 3.9 |  |  | 4.2 |
Aerospace & Defense |  | 3.4 |  |  | 1.7 |
Leisure Equipment & Products |  | 3.3 |  |  | 3.5 |
Auto Components |  | 3.1 |  |  | 1.7 |
Chemicals |  | 2.8 |  |  | 0.4 |
Hotels, Restaurants & Leisure |  | 2.8 |  |  | 2.8 |
Textiles, Apparel & Luxury Goods |  | 2.6 |  |  | 2.8 |
Diversified Financial Services |  | 2.2 |  |  | 2.3 |
Specialty Retail |  | 2.1 |  |  | 2.0 |
Computers & Peripherals |  | 2.0 |  |  | 3.0 |
Construction & Engineering |  | 1.8 |  |  | 2.1 |
Software |  | 1.7 |  |  | 1.6 |
Communications Equipment |  | 1.6 |  |  | 2.9 |
Energy Equipment & Services |  | 1.6 |  |  | 1.6 |
Household Products |  | 1.6 |  |  | 1.7 |
Internet & Catalog Retail |  | 1.6 |  |  | 1.6 |
Marine |  | 1.5 |  |  | 1.5 |
Food & Staples Retailing |  | 1.3 |  |  | 1.6 |
Trading Companies & Distributors |  | 1.3 |  |  | 1.3 |
Air Freight & Logistics |  | 1.0 |  |  | 0.9 |
Media |  | 1.0 |  |  | 1.2 |
Oil, Gas & Consumable Fuels |  | 1.0 |  |  | — |
Health Care Equipment & Supplies |  | 0.6 |  |  | 1.1 |
Building Products |  | 0.3 |  |  | 2.2 |
Other (1) |  | 2.4 |  |  | 2.4 |
|  | 100.0 | % |  | 100.0 | %
___________________ (1)Includes various industries with each industry individually less than 1.0% of the total combined Private Loan, LMM and Middle Market portfolio investments at each date.
Fair Value: |  | March 31, 2025 |  | December 31, 2024
Machinery |  | 8.4 | % |  | 9.1 | %
Electrical Equipment |  | 7.2 |  |  | 4.7 |
Commercial Services & Supplies |  | 6.4 |  |  | 6.6 |
Professional Services |  | 5.6 |  |  | 6.1 |
Diversified Consumer Services |  | 5.3 |  |  | 6.0 |
Internet Software & Services |  | 5.2 |  |  | 6.3 |
Containers & Packaging |  | 5.0 |  |  | 4.8 |
IT Services |  | 4.2 |  |  | 4.5 |
Distributors |  | 4.1 |  |  | 4.3 |
Computers & Peripherals |  | 3.8 |  |  | 5.1 |
Health Care Providers & Services |  | 3.5 |  |  | 3.8 |
Aerospace & Defense |  | 3.3 |  |  | 1.7 |
Auto Components |  | 3.0 |  |  | 1.7 |
Chemicals |  | 2.7 |  |  | 0.4 |
Construction & Engineering |  | 2.7 |  |  | 3.0 |
Leisure Equipment & Products |  | 2.7 |  |  | 2.9 |
Textiles, Apparel & Luxury Goods |  | 2.4 |  |  | 2.6 |
Diversified Financial Services |  | 2.1 |  |  | 2.3 |
Software |  | 2.1 |  |  | 2.1 |
Specialty Retail |  | 2.1 |  |  | 2.2 |
Hotels, Restaurants & Leisure |  | 2.0 |  |  | 2.0 |
Household Products |  | 1.6 |  |  | 1.8 |
Communications Equipment |  | 1.5 |  |  | 1.4 |
Air Freight & Logistics |  | 1.4 |  |  | 1.4 |
Energy Equipment & Services |  | 1.4 |  |  | 1.3 |
Marine |  | 1.4 |  |  | 1.4 |
Food & Staples Retailing |  | 1.2 |  |  | 1.3 |
Internet & Catalog Retail |  | 1.2 |  |  | 1.4 |
Trading Companies & Distributors |  | 1.2 |  |  | 1.3 |
Media |  | 1.0 |  |  | 1.5 |
Oil, Gas & Consumable Fuels |  | 1.0 |  |  | — |
Building Products |  | 0.4 |  |  | 2.3 |
Other (1) |  | 2.9 |  |  | 2.7 |
|  | 100.0 | % |  | 100.0 | %
___________________ (1)Includes various industries with each industry individually less than 1.0% of the total combined Private Loan, LMM and Middle Market portfolio investments at each date. As of March 31, 2025 and December 31, 2024, MSC Income had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value. Unconsolidated Significant Subsidiaries In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, MSC Income must determine which of its unconsolidated controlled portfolio companies, if any, are considered “significant subsidiaries.” In evaluating its unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that MSC Income must utilize to determine if any of MSC Income’s Control Investments (as defined in Note A — Organization and Basis of Presentation, including those unconsolidated portfolio companies defined as Control Investments in which MSC Income does not own greater than 50% of the voting securities nor have rights to maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing MSC Income’s investment in the Control Investment by the value of MSC Income’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of MSC Income’s change in net assets resulting from operations for the same period. Rules 3-09 and 4-08(g) of Regulation S-X require MSC Income to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which MSC Income owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary. As of March 31, 2025 and December 31, 2024, MSC Income had no single investment that qualified as a significant subsidiary under either the investment or income tests.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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