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Investments
 12 Months Ended
Dec. 31, 2015
Equity Method Investments and Joint Ventures [Abstract]  
Investments
Investments
Investments consist of the following:
 
As of December 31,
 
2015
 
2014
 
(Dollars in millions)
Equity method investments, excluding accrued performance fees
$
873.9

 
$
918.7

Trading securities and other investments
12.0

 
12.9

Total investments
$
885.9

 
$
931.6


Strategic Investment in NGP
On December 20, 2012, the Partnership entered into separate purchase agreements with ECM Capital, L.P. and Barclays Natural Resource Investments, a division of Barclays Bank PLC (“BNRI”), pursuant to which the Partnership agreed to invest in NGP Management Company, L.L.C. (“NGP Management” and, together with its affiliates, “NGP”). NGP is an Irving, Texas-based energy investor.
The Partnership’s equity interests in NGP Management entitle the Partnership to an allocation of income equal to 55.0% of the management fee-related revenues of the NGP entities that serve as the advisors to certain private equity funds, and future interests in the general partners of certain future carry funds advised by NGP that entitle the Partnership to an allocation of income equal to 47.5% of the carried interest received by such fund general partners. For periods prior to 2015, the Partnership’s allocation of income related to management fee-related revenues of NGP was 47.5%. This increase in the allocation of income did not result in a change in accounting for the investment as an equity method investment. The Partnership has an option, exercisable by the Partnership in approximately 9 years, to purchase from ECM Capital, L.P. and its affiliates, for a formulaic purchase price in cash based upon a measure of the earnings of NGP, the remaining equity interests in NGP Management.
In July 2014, the Partnership exercised another option granted in 2012 to acquire from BNRI its interests in the general partner of the NGP Natural Resources X, L.P. fund (“NGP X”), which entitles the Partnership to an allocation of income equal to 40% of the carried interest received by the fund’s general partner. The Partnership additionally acquired certain general partner investments in the NGP X fund. As of December 31, 2015, there was no carrying value of the Partnership’s investment in the NGP X general partner attributable to the carried interest allocation, while at December 31, 2014 it was approximately $18.5 million. The carrying value of the Partnership’s general partner investments in the NGP X fund not attributable to the carried interest allocation was $18.7 million as of December 31, 2015 and $20.4 million as of December 31, 2014.
In consideration for these interests and option, the Partnership paid an aggregate of $504.6 million in cash to ECM Capital, L.P. and BNRI, and issued 996,572 Carlyle Holdings partnership units to ECM Capital, L.P. that vest ratably over a period of five years. The transaction also includes contingent consideration payable to ECM Capital, L.P. of up to $45.0 million in cash, 597,944 Carlyle Holdings partnership units that were issued at closing but vest upon the achievement of performance conditions, and contingently issuable Carlyle Holdings partnership units with a value up to $15.0 million that will be issued if the performance conditions are met. The contingent consideration is payable in 2018, depending on NGP’s achievement of certain business performance goals. Additionally, the transaction included contingent consideration payable to BNRI of $183.0 million, which was paid in 2016 with $63.0 million in cash and $120.0 million by a six year promissory note issued by the Partnership. The promissory note will accrue interest at the three month LIBOR plus 2.5%.
As of January 15, 2015, the NGP Natural Resources XI, L.P. fund (“NGP XI”) had closed on aggregate commitments of approximately $5.3 billion. Based on the amount of NGP XI commitments raised, BNRI is entitled to receive the contingent consideration when such payment becomes due in 2016. Accordingly, as of December 31, 2015, the Partnership has accrued $183.0 million related to this future payment obligation.  Based on the contractual agreement between the Partnership and BNRI, payment of the cash portion of the contingent consideration and the issuance of the promissory note to BNRI occurred in January 2016.

The Partnership also has a senior advisor consulting agreement with the chief executive officer of NGP and granted in 2012 deferred restricted common units to a group of NGP personnel who are providing the Partnership with consulting services.
The Partnership accounts for its investment in NGP Management under the equity method of accounting. The Partnership recorded its investment in NGP Management initially at cost, excluding any elements in the transaction that were deemed to be compensatory arrangements to NGP personnel. The Carlyle Holdings partnership units issued in the transaction, the contingently issuable Carlyle Holdings partnership units, and the deferred restricted common units were deemed to be compensatory arrangements; these elements are recognized as an expense under applicable U.S. GAAP.
The Partnership records investment income (loss) for its equity income allocation from NGP management fees and performance fees, and also records its share of any allocated expenses from NGP Management, expenses associated with the compensatory elements of the transaction, and the amortization of the basis differences related to the definitive-lived identifiable intangible assets of NGP Management. The net investment earnings (loss) recognized in the Partnership’s consolidated statements of operations for the years ended December 31, 2015, 2014 and 2013 were as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Management fees
$
53.9

 
$
56.8

 
$
63.2

Performance fees
(18.5
)
 
(39.2
)
 
—

Investment loss
(3.3
)
 
(2.2
)
 
—

Expenses and amortization of basis differences
(71.9
)
 
(74.7
)
 
(77.2
)
Net investment loss
$
(39.8
)
 
$
(59.3
)
 
$
(14.0
)


The difference between the Partnership’s carrying value of its investment and its share of the underlying net assets of the investee was $85.0 million, $141.6 million and $199.6 million as of December 31, 2015, 2014 and 2013, respectively; these differences are amortized over a period of ten years from the initial investment date.
Equity-Method Investments
The Partnership’s equity method investments include its fund investments in Corporate Private Equity, Global Market Strategies and Real Assets, typically as general partner interests, and its strategic investment in NGP Management (included within Real Assets), which are not consolidated. Investments are related to the following segments:
 
 
As of December 31,
 
2015
 
2014
 
(Dollars in millions)
Corporate Private Equity
$
254.5

 
$
246.3

Global Market Strategies
26.7

 
25.3

Real Assets
592.7

 
647.1

Total
$
873.9

 
$
918.7


 
The summarized financial information of the Partnership’s equity method investees from the date of initial investment is as follows (Dollars in millions):
 




 

Aggregate Totals
 
Corporate
Private Equity

 Global
Market Strategies

Real Assets


For the Year Ended
December 31,

For the Year Ended
December 31,

For the Year Ended
December 31,

For the Year Ended
December 31,
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Statement of operations information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income
$
380.7

 
$
528.3

 
$
699.7

 
$
193.6

 
$
193.5

 
$
199.3

 
$
441.2

 
$
1,114.7

 
$
1,034.6

 
$
1,015.5

 
$
1,836.5

 
$
1,933.6

Expenses
613.8

 
665.6

 
495.9

 
45.7

 
48.7

 
65.0

 
604.4

 
678.2

 
508.6

 
1,263.9

 
1,392.5

 
1,069.5

Net investment income (loss)
(233.1
)
 
(137.3
)
 
203.8

 
147.9

 
144.8

 
134.3

 
(163.2
)
 
436.5

 
526.0

 
(248.4
)
 
444.0

 
864.1

Net realized and unrealized gain (loss)
4,831.6

 
8,387.9

 
9,795.5

 
(323.1
)
 
247.0

 
305.2

 
(3,047.6
)
 
2,611.0

 
209.7

 
1,460.9

 
11,245.9

 
10,310.4

Net income (loss)
$
4,598.5

 
$
8,250.6

 
$
9,999.3

 
$
(175.2
)
 
$
391.8

 
$
439.5

 
$
(3,210.8
)
 
$
3,047.5

 
$
735.7

 
$
1,212.5

 
$
11,689.9

 
$
11,174.5


 

Corporate
Private Equity

Global
Market Strategies

Real Assets

Aggregate Totals
 
As of December 31,

As of December 31,

As of December 31,

As of December 31,
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Balance sheet information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
35,535.4

 
$
38,498.0

 
$
2,262.1

 
$
2,398.4

 
$
21,182.7

 
$
29,815.1

 
$
58,980.2

 
$
70,711.5

Total assets
$
39,489.9

 
$
41,636.9

 
$
2,604.0

 
$
2,542.2

 
$
22,393.2

 
$
31,009.3

 
$
64,487.1

 
$
75,188.4

Debt
$
281.5

 
$
276.3

 
$
176.6

 
$
67.3

 
$
1,512.5

 
$
1,042.9

 
$
1,970.6

 
$
1,386.5

Other liabilities
$
540.7

 
$
1,445.3

 
$
17.7

 
$
15.0

 
$
331.4

 
$
875.2

 
$
889.8

 
$
2,335.5

Total liabilities
$
822.2

 
$
1,721.6

 
$
194.3

 
$
82.3

 
$
1,843.9

 
$
1,918.1

 
$
2,860.4

 
$
3,722.0

Partners’ capital
$
38,667.7

 
$
39,915.3

 
$
2,409.7

 
$
2,459.9

 
$
20,549.3

 
$
29,091.2

 
$
61,626.7

 
$
71,466.4


Investment Income (Loss)
The components of investment income (loss) are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Income (loss) from equity investments
$
9.4

 
$
(8.3
)
 
$
14.2

Income (loss) from trading securities
(1.7
)
 
0.1

 
4.2

Other investment income
7.5

 
1.0

 
0.4

Total
$
15.2

 
$
(7.2
)
 
$
18.8


Carlyle’s income (loss) from its equity-method investments is included in investment income (loss) in the consolidated statements of operations and consists of:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Corporate Private Equity
$
28.9

 
$
53.8

 
$
59.2

Global Market Strategies
(0.9
)
 
1.3

 
4.6

Real Assets
(18.6
)
 
(63.4
)
 
(49.6
)
Total
$
9.4

 
$
(8.3
)
 
$
14.2


Trading Securities and Other Investments
Trading securities and other investments as of December 31, 2015 and 2014 primarily consisted of $12.0 million and $12.9 million, respectively, of investments in derivative instruments and corporate mezzanine securities and bonds, as well as other cost method investments in 2014.
Investments of Consolidated Funds
During the year ended December 31, 2015, the Partnership formed eight new CLOs. The Partnership has concluded that these CLOs are VIEs and the Partnership is the primary beneficiary. As a result, the Partnership consolidated the financial positions and results of operations of the CLOs into its consolidated financial statements beginning on their respective closing dates. As of December 31, 2015, the total assets of these CLOs included in the Partnership’s consolidated financial statements were approximately $5.0 billion.

The following table presents a summary of the investments held by the Consolidated Funds. Investments held by the Consolidated Funds do not represent the investments of all Carlyle sponsored funds. The table below presents investments as a percentage of investments of Consolidated Funds:
 
 
Fair Value
 
Percentage of Investments of
Consolidated Funds
 
 
Geographic Region/Instrument Type/ Industry
December 31,
 
December 31,
 
Description or Investment Strategy
2015
 
2014
 
2015
 
2014
 
 
(Dollars in millions)
 
 
 
 
 
United States
 
 
 
 
 
 
 
 
Equity securities:

 

 

 

 
Commercial & Professional Services
$
0.2

 
$
201.3

 
—
%
 
0.77
%
 
Diversified Financials
290.2

 
264.4

 
1.21
%
 
1.02
%
 
Food, Beverage & Tobacco
—

 
414.0

 
—
%
 
1.59
%
 
Media
69.3

 
97.3

 
0.29
%
 
0.37
%
 
Health Care Equipment & Services
71.7

 
100.9

 
0.30
%
 
0.39
%
 
Consumer Services
38.6

 
67.7

 
0.16
%
 
0.26
%
 
Capital Goods
0.6

 
60.3

 
—
%
 
0.23
%
 
Software & Services
65.4

 
38.9

 
0.27
%
 
0.15
%
 
Transportation
3.1

 
49.6

 
0.01
%
 
0.19
%
 
Food & Staples Retailing
—

 
30.9

 
—
%
 
0.12
%
 
Consumer Durables & Apparel
50.6

 
7.6

 
0.21
%
 
0.03
%
 
Other
1.1

 
0.9

 
—
%
 
—
%
 
Total equity securities (cost of $833.0 and $1,337.9 at
December 31, 2015 and 2014, respectively)
590.8

 
1,333.8

 
2.45
%
 
5.12
%
 
Partnership and LLC interests:

 

 

 

 
Fund Investments (cost of $1,784.7 and $2,154.3 at
December 31, 2015 and 2014, respectively)
1,889.3

 
2,188.5

 
7.87
%
 
8.41
%
 
Loans:

 

 

 

 
Retailing
6.8

 
109.1

 
0.03
%
 
0.42
%
 
Diversified Financials
—

 
6.7

 
—
%
 
0.03
%
 
Commercial & Professional Services
0.1

 
31.1

 
—
%
 
0.12
%
 
Materials
0.6

 
32.5

 
—
%
 
0.12
%
 
Transportation
—

 
27.8

 
—
%
 
0.11
%
 
Other
5.9

 
4.3

 
0.03
%
 
0.02
%
 
Total loans (cost of $83.6 and $260.7 at
December 31, 2015 and 2014, respectively)
13.4

 
211.5

 
0.06
%
 
0.82
%
 
Total investment in Hedge Funds
2,841.2

 
3,753.5

 
11.84
%
 
14.42
%
 
Assets of the CLOs

 

 

 

 
Bonds
50.6

 
141.8

 
0.21
%
 
0.54
%
 
Equity
2.3

 
6.5

 
0.01
%
 
0.02
%
 
Loans
11,241.0

 
10,203.3

 
46.84
%
 
39.20
%
 
Total assets of the CLOs (cost of $11,658.3 and $10,413.0 at
December 31, 2015 and 2014, respectively)
11,293.9

 
10,351.6

 
47.06
%
 
39.76
%
 
Total United States
$
16,628.6

 
$
17,838.9

 
69.28
%
 
68.53
%

 
 
Fair Value
 
Percentage of Investments of
Consolidated Funds
Geographic Region/Instrument Type/ Industry
December 31,
 
December 31,
Description or Investment Strategy
2015
 
2014
 
2015
 
2014
 
(Dollars in millions)
 
 
 
 
Europe
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
Food & Staples Retailing
57.9

 
$
350.4

 
0.24
%
 
1.35
%
Consumer Services
94.7

 
38.2

 
0.39
%

0.15
%
Energy
—

 
168.8

 
—
%
 
0.65
%
Retailing
95.7

 
119.4

 
0.40
%
 
0.46
%
Health Care Equipment & Services
81.0

 
97.8

 
0.34
%
 
0.38
%
Commercial & Professional Services
43.0

 
75.4

 
0.18
%
 
0.29
%
Transportation
—

 
88.8

 
—
%
 
0.34
%
Media
10.5

 
40.0

 
0.04
%
 
0.15
%
Other
35.8

 
32.5

 
0.15
%
 
0.12
%
Total equity securities (cost of $650.2 and $939.1 at
December 31, 2015 and 2014, respectively)
418.6

 
1,011.3

 
1.74
%
 
3.89
%
Partnership and LLC interests:

 
 
 

 
 
Fund Investments (cost of $694.3 and $840.9 at
December 31, 2015 and 2014, respectively)
640.6

 
800.0

 
2.67
%
 
3.07
%
Assets of the CLOs

 
 
 

 
 
Bonds
1,115.8

 
1,081.3

 
4.65
%
 
4.15
%
Equity
3.8

 
9.7

 
0.02
%
 
0.04
%
Loans
3,837.4

 
4,208.5

 
15.99
%
 
16.17
%
Other
5.0

 
1.5

 
0.02
%
 
0.01
%
Total assets of the CLOs (cost of $5,048.3 and $5,429.1 at
December 31, 2015 and 2014, respectively)
4,962.0

 
5,301.0

 
20.68
%
 
20.37
%
Total Europe
$
6,021.2

 
$
7,112.3

 
25.09
%
 
27.33
%
Global

 
 
 

 
 
Equity securities:

 
 
 

 
 
Food, Beverage & Tobacco (cost of $77.0 and $85.6 at
December 31, 2015 and 2014, respectively)
$
126.2

 
$
110.8

 
0.53
%
 
0.43
%
Assets of the CLOs

 
 
 

 
 
Bonds
14.5

 
12.7

 
0.06
%
 
0.05
%
Loans
594.9

 
461.6

 
2.48
%
 
1.77
%
Total assets of the CLOs (cost of $643.7 and $480.6 at
December 31, 2015 and 2014, respectively)
609.4

 
474.3

 
2.54
%
 
1.82
%
Partnership and LLC interests:

 
 
 

 
 
Fund Investments (cost of $497.7 and $452.7 at
December 31, 2015 and 2014, respectively)
613.4

 
492.5

 
2.56
%
 
1.89
%
Total Global
$
1,349.0

 
$
1,077.6

 
5.63
%
 
4.14
%
Total investments of Consolidated Funds (cost of $21,987.8 and $22,393.9 at December 31, 2015 and 2014, respectively)
$
23,998.8

 
$
26,028.8

 
100.00
%
 
100.00
%

There were no individual investments with a fair value greater than five percent of the Partnership’s total assets for any period presented.

 


Interest and Other Income of Consolidated Funds
The components of interest and other income of Consolidated Funds are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Interest income from investments
$
873.1

 
$
864.9

 
$
876.8

Other income
102.4

 
91.1

 
166.3

Total
$
975.5

 
$
956.0

 
$
1,043.1


Net Investment Gains (Losses) of Consolidated Funds
Net investment gains (losses) of Consolidated Funds include net realized gains (losses) from sales of investments and unrealized gains (losses) resulting from changes in fair value of the Consolidated Funds’ investments. The components of net investment gains (losses) of Consolidated Funds are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Gains from investments of Consolidated Funds
$
426.2

 
$
857.7

 
$
1,390.5

Gains (losses) from liabilities of CLOs
436.5

 
27.2

 
(695.1
)
Gains on other assets of CLOs
1.7

 
2.1

 
1.3

Total
$
864.4

 
$
887.0

 
$
696.7


The following table presents realized and unrealized gains (losses) earned from investments of the Consolidated Funds:
 
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(Dollars in millions)
Realized gains
$
1,114.7

 
$
1,107.4

 
$
662.0

Net change in unrealized gains (losses)
(688.5
)
 
(249.7
)
 
728.5

Total
$
426.2

 
$
857.7

 
$
1,390.5