Investcorp, the London/Bahrain-listed asset management firm specializing in property, hedge funds and private equity, reported a gross operating loss for the 12 months to 30 June of $89.0 million, prior to provisions and expenses.

After deducting provisions of $22.2 million, interest expense of $115.0 million and operating expenses of $206.3 million, the net operating loss was $432.5 million, the firm said in a statement.

Assets under management stood at $11.7 billion at the end of June, down from $17.7 billion a year before.

The firm said its Tier 1 capital adequacy ratio – a key barometer of financial strength – was 20 per cent, up from 18 per cent a year ago.

“The systemic shock to the financial system that occurred from September 2008 has impacted financial performance in two ways: reducing fee income and lowering the book value of balance sheet co-investments, largely due to unrealized mark-to-market valuation declines,” Investcorp said.

“Encouragingly, the second half of the fiscal year (January to June 2009) has witnessed a strong turnaround, with a significantly reduced net loss of $269.5 million driven by strong returns in hedge funds that were offset by the mark-to-market declines in private equity and real estate valuations,” the firm said.

Fee income was $129.4 million, compared to $382.9 million in the previous year, reflecting an unprecedented low level of investment acquisition and deal-by-deal placement that substantially affected activity fees.