MSC Fund’s Smart Exit: A Mail Merger and a 33% Annual Return

HOUSTON, TX – January 06, 2026 – In a move that highlights both savvy portfolio management and significant consolidation in the marketing logistics industry, MSC Income Fund, Inc. (NYSE: MSIF) has announced a lucrative exit from one investment and a strategic entry into another. The fund realized a staggering 32.9% annual return on its equity investment in Mystic Logistics Holdings, LLC, while simultaneously financing the company's merger with United Business Mail (UBM) through a new $12.7 million investment.

The transaction effectively creates a powerhouse in the specialized world of marketing mail. MSC Income Fund, which partners with Main Street Capital Corporation (NYSE: MAIN), has pivoted from its role as an investor in Mystic to become a key financial backer of the newly enlarged UBM, holding both senior secured debt and a direct minority equity stake. This maneuver not only locked in substantial gains for the fund but also positioned it to capitalize on the future growth of a more dominant market player.

The Anatomy of a Profitable Exit

The financial results from MSC Income Fund's exit from Mystic Logistics are a case study in successful lower middle-market investing. The fund’s journey with Mystic began in August 2014 with a modest co-investment alongside Main Street. The initial outlay included a $2.5 million senior secured term loan and a $0.7 million equity investment to support a majority recapitalization of the logistics specialist.

Over the next decade, Mystic experienced significant growth, expanding its customer base and strengthening its partnerships. This growth culminated in the merger with UBM, providing a strategic exit point for MSC Income Fund. The returns were nothing short of spectacular. The fund realized a $6.0 million gain on its original $0.7 million equity stake. When combined with the $5.5 million in total dividends received over the life of the investment, the fund’s equity position generated an annual internal rate of return (IRR) of 32.9% and a 17.9 times money invested (TMI) return.

Even when including the debt portion of the financing, the cumulative returns remain impressive. The combined debt and equity investments yielded an IRR of 22.9% and a 5.1 TMI return. This performance underscores the fund's stated strategy: partnering with entrepreneurs and management teams, fostering growth, and executing well-timed exits that generate significant value for shareholders.

A Strategic Merger in Marketing Mail

Beyond the impressive financial figures, the transaction signals a major strategic consolidation within the marketing mail industry. The merger joins two complementary leaders: United Business Mail, the nation's largest independent provider of mail commingling services, and Mystic Logistics, a specialist in precise, date-driven in-home delivery.

UBM's business model is built on scale and efficiency. By collecting mail from numerous clients and combining it into large, presorted volumes—a process known as commingling—the company enables its customers to achieve significant USPS postage discounts, often saving them 10-20% annually. With facilities processing over 2.5 billion pieces of mail per year and a history of innovation, such as pioneering Carrier Route Sortation for commingled mail, UBM is a leader in cost optimization and delivery speed.

Mystic Logistics, on the other hand, excels in precision. The company focuses on meticulous transportation planning and mail flow optimization to ensure marketing materials arrive within a specific, targeted window. This capability is critical for campaigns tied to sales events, promotions, or coordinated multi-channel marketing efforts.

The synergy is clear: UBM offers the efficiency of bulk processing, while Mystic provides the effectiveness of precise timing. By joining forces, the combined entity can offer clients a comprehensive, end-to-end solution for their direct mail needs, from initial cost savings to final, measurable delivery performance. According to a statement released with the merger news, Mystic will continue to operate as a wholly-owned subsidiary, preserving its brand and leadership under its president, Charlene Dufresne, ensuring continuity for its specialized services and client base.

The Enduring Power of the Mailbox

This high-stakes deal is also a powerful bet on the continued relevance of physical mail in an increasingly digital world. While digital marketing dominates many conversations, direct mail remains a remarkably effective and growing channel. Global market projections show the direct mail services industry growing at a steady clip, with marketers citing its high response rates as a key advantage. Studies consistently show that direct mail achieves average response rates between 2.7% and 4.4%, dwarfing the typical 0.1% to 0.6% seen in email marketing.

This effectiveness is driving increased investment, with a majority of marketers reporting larger budgets for direct mail in recent years. The industry's future lies in its ability to integrate with digital strategies and leverage data for greater personalization and targeting. The merger between UBM and Mystic positions the new entity to lead in this evolving landscape. Their combined technological prowess and logistical expertise are essential for executing the sophisticated, data-driven omnichannel campaigns that define modern marketing.

The investment from MSC Income Fund and the strategic combination of UBM and Mystic demonstrate a clear confidence that the mailbox is far from obsolete. Instead, it is a vital component of the marketing mix, and the companies that can master its complex logistics are poised for significant growth. This merger creates a stronger, more versatile player capable of meeting the complex demands of today's advertisers, solidifying its competitive position in a vital and evolving sector.