Investcorp, the Bahrain-based alternative investment specialist, is planning regional expansion after yesterday reporting a third consecutive year of positive income since the global financial crisis of 2008-09.

Responding to client demand and subject to regulatory approval, Investcorp is set to expand in the Gulf, while maintaining its significant historical presence in Bahrain.

The plan includes opening a number of offices in the region and expanding its office in Riyadh.

The firm's net income fell to $ 67.4 million from $ 140.3m last year due to lower returns on its portfolio of co-investments.

But the result showed strong fee income growth of 20 per cent year-on-year.

Investcorp continued deleveraging its balance sheet and kept prudent control of operating expenses.

The board is recommending a dividend of $ 7.5 per ordinary share, down from $ 15 last year, along with a full dividend of 12pc on the preference shares.

Fee income grew largely as a result of a significant increase in acquisition and placement activity.

Investcorp's corporate investment business has continued its trajectory of strong recovery from the global financial crisis, and over the year has distributed $ 474m to investors.

Asset-based income was significantly down year-on-year partly because of the European crisis, accentuated by a slowing global economic environment.

Despite this, in the second half of the financial year, Investcorp's hedge fund business showed a modest recovery from the exceptionally difficult return environment in the first-half to record a 1.2pc gain.

Asset-based income was also affected by Investcorp's cautious view towards valuation of its corporate investments in light of prevailing high levels of market uncertainty, particularly in Europe.

Ongoing efforts to manage fixed operating expenses, together with lower incentive compensation accruals in line with the lower income, led to a 30pc reduction in operating expenses to $ 150.7m from $ 215.2m in the prior period.

A continued programme to progressively deleverage the balance sheet resulted in a lowering of interest expense by 15pc to $ 47.8m.

Investcorp completed a new $ 529m multi-currency loan facility in June with international and Gulf banks.

The facility, which has a final maturity in September 2015, has early refinanced loans that become due in 2013.

It will help maintain a strong level of operational liquidity and a robust long-dated funding profile.

Total assets on June 30 were $ 2.7 billion, a slight decrease from $ 2.9bn a year ago.

Liabilities also decreased from $ 1.8bn to $ 1.7bn and Investcorp's capital adequacy ratio increased to 26.9pc, well in excess of regulatory minimums.

"We are encouraged by the significant progress made in such a challenging year, not least from our core transactional business which saw a strong pick up of our placement activities," said executive chairman and chief executive Nemir A Kirdar.

"This response shows the enduring strength of our model in offering investors the opportunity for international portfolio diversification," he said.

"It also underpins our plans to expand our office network across the Gulf to be closer to our clients.

"We also took further measures to deleverage, reduce our operating costs and ensure we are properly funded for the future.

"We continue to plant seeds for the years ahead to continue generating returns for investors and shareholders alike," Mr Kirdar added.