UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED DECEMBER 31 , 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 001-35538
The Carlyle Group Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(202 ) 729-5626
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ý No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
The aggregate market value of the common stock of the Registrant held by non-affiliates as of June 30, 2024 was $10,349,383,795 .
The number of the Registrant’s shares of common stock outstanding as of February 20, 2025 was 361,202,883 .
DOCUMENTS INCORPORATED BY REFERENCE
incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2025 Proxy Statement will be filed with the U.S. Securities
and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
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TABLE OF CONTENTS
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ITEM 1. | ||
ITEM 1A. | ||
ITEM 1B. | ||
ITEM 1C. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 5. | ||
ITEM 6. | ||
ITEM 7. | ||
ITEM 7A. | ||
ITEM 8. | ||
ITEM 9. | ||
ITEM 9A. | ||
ITEM 9B. | ||
ITEM 9C. | ||
ITEM 10. | ||
ITEM 11. | ||
ITEM 12. | ||
ITEM 13. | ||
ITEM 14. | ||
ITEM 15. | ||
ITEM 16. |
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Forward-Looking Statements
This Annual Report on Form 10-K may contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements
include, but are not limited to, statements related to our expectations, estimates, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions and statements that are not historical facts, including our expectations
regarding the performance of our business, our financial results, our liquidity and capital resources, contingencies, and our
dividend policy. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”
“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,”
“estimates,” “anticipates,” or the negative version of these words or other comparable words. Such forward-looking statements
are subject to various risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause
actual outcomes or results to differ materially from those indicated in these statements including, but not limited to, those listed
below and those described under the section entitled “Risk Factors” in this Annual Report on Form 10-K, as such factors may
be updated from time to time in our periodic filings with the U.S. Securities and Exchange Commission (the “SEC”), which are
accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K and in our other
periodic filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements,
whether as a result of new information, future developments, or otherwise, except as required by applicable law.
Summary of Risk Factors
The following is only a summary of the principal risks that may materially adversely affect our business, financial
condition, results of operations, and cash flows. The following should be read in conjunction with the complete discussion of
risk factors we face, which are set forth in Item 1A “Risk Factors.”
Risks Related to Our Company
•Adverse economic and market conditions and other events or conditions throughout the world could negatively impact our
business in many ways, including by reducing the value or performance of the investments made by our investment funds
and reducing the ability of our investment funds to raise capital, any of which could materially reduce our revenue,
earnings, and cash flow and adversely affect our financial prospects and condition.
•Our use of leverage may expose us to substantial risks.
•Our revenue, earnings, net income, and cash flow can all vary materially, which may make it difficult for us to achieve
steady earnings growth on a quarterly basis and may cause the price of our common stock to decline.
•Given our focus on achieving superior investment performance and maintaining and strengthening investor relations, we
may reduce our AUM, restrain its growth, reduce our fees, or otherwise alter the terms under which we do business when
we deem it in the best interest of our investors—even in circumstances where such actions might be contrary to the near-
term interests of our stockholders.
•We depend on our senior Carlyle professionals, including our Chief Executive Officer, and the loss of their services or
investor confidence in such personnel could have a material adverse effect on our business, results of operations, and
financial condition.
•Recruiting and retaining our professionals has become more difficult and may continue to be difficult in the future, which
could adversely affect our business, results of operations, and financial condition.
•We may expand into new investment strategies, geographic markets, businesses, and types of investors, or seek to expand
our business or change our strategic focus with new strategic initiatives, which may result in additional risks and
uncertainties in our business.
•Operational risks (including those associated with our business model), system security risks, breaches of data protection,
cyberattacks, or actions or failure to act by our employees or others with authorized access to our networks, including our
ability to insure against such risks, may disrupt our businesses, result in losses, or limit our growth.
Risks Related to Regulation and Litigation
•Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security worldwide may
limit the use and adoption of our services and adversely affect our business.
•Extensive regulation of our business affects our activities and creates the potential for significant liabilities and penalties,
and could result in additional burdens on our business.
3
•Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of
increased regulatory focus could result in additional burdens and expenses on our business.
•Regulatory initiatives in jurisdictions outside the United States could adversely affect our business.
•We are subject to substantial risk of litigation and regulatory proceedings and may face significant liabilities and damage to
our reputation as a result of allegations of improper conduct and negative publicity.
Risks Related to Our Business Operations
Risks Related to the Assets We Manage
•The asset management business is intensely competitive.
•Poor performance of our investment funds would cause a decline in our revenue, income, and cash flow, may obligate us to
repay carried interest previously paid to us, and could adversely affect our ability to raise capital for future investment
funds.
•The historical returns attributable to our funds, including those presented in this Annual Report on Form 10-K, should not
be considered as indicative of the future results of our funds or of our future results or of any returns expected on an
investment in our common stock.
•Trade negotiations and related government actions may create regulatory uncertainty for our funds’ portfolio companies
and our investment strategies and adversely affect the profitability of our funds’ portfolio companies.
•Our asset management business depends in large part on our ability to raise capital from third-party investors. If we are
unable to raise capital from third-party investors, we would be unable to collect management fees or deploy their capital
into investments and potentially collect carried interest, which would materially reduce our revenue and cash flow and
adversely affect our financial condition.
•We have increasingly undertaken business initiatives to increase the number and type of investment products we offer to
retail investors, which could expose us to new and greater levels of risk.
•Our investors may negotiate to pay us lower management fees and the economic terms of our future funds may be less
favorable to us than those of our existing funds, which could adversely affect our revenues.
•Valuation methodologies for certain assets in our funds can involve subjective judgments, and the fair value of assets
established pursuant to such methodologies may be incorrect, which could result in the misstatement of fund performance
and accrued performance allocations.
•The due diligence process that we undertake in connection with investments by our investment funds may not reveal all
facts that may be relevant in connection with an investment.
•High interest rates and challenging debt market conditions have negatively impacted and could continue to negatively
impact the values of certain assets or investments and the ability of our funds and their portfolio companies to access the
capital markets, which could adversely affect investment and realization opportunities, lead to lower-yielding investments,
and potentially decrease our net income.
•Our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a
considerable period of time or lose some or all of our principal investments.
•Our funds make investments in companies that are based outside of the United States, which may expose us to additional
risks not typically associated with investing in companies that are based in the United States.
•Certain of our fund investments may be concentrated in particular asset types or geographic regions, which could
exacerbate any negative performance of those funds to the extent those concentrated investments perform poorly.
•We are reliant on third-party service providers for certain aspects of our business and are subject to risks in using prime
brokers, custodians, counterparties, administrators, and other agents.
Industry Risks Related to the Assets We Manage
•Our real estate funds are subject to risks inherent in the ownership and operation of real estate and the construction and
development of real estate.
•Our energy business is involved in oil and gas investments (i.e., exploration, production, storage, transportation, logistics,
refining, marketing, trading, petrochemicals, energy services, and other opportunistic investments), which entail a high
degree of risk.
•Investments in the natural resources industry, including the infrastructure, energy, power, and renewables industries,
involve various operational, construction, and regulatory risks.
4
•Investments in the insurance industry (including our investment in Fortitude) could be adversely impacted by insurance
regulations and potential regulatory reforms.
Risks Related to Our Common Stock
•The market price of our common stock may decline due to the large number of shares of common stock eligible for future
sale.
•Carlyle Group Management L.L.C. has significant influence over us and its interests may conflict with ours or yours.
•Our co-founders have the right to designate members of our Board of Directors.
•Anti-takeover provisions in our organizational documents and Delaware law may discourage or delay acquisition attempts
for us that stockholders might consider favorable.
Risks Related to Taxation
•Changes in relevant tax laws, regulations, or treaties or an adverse interpretation of these items by tax authorities could
negatively impact our effective tax rate, tax liability, and/or the performance of certain funds should unexpected taxes be
assessed to portfolio investments (companies) or fund income.
•U.S. and foreign tax regulations could adversely affect our ability to raise funds from certain foreign investors and increase
compliance costs.
On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P.
into a Delaware Corporation named The Carlyle Group Inc. (the conversion, together with such restructuring steps and related
transactions, the “Conversion”).
Unless the context suggests otherwise, references in this Annual Report on Form 10-K to “Carlyle,” the “Company,”
“we,” “us,” and “our” refer to The Carlyle Group Inc. and its consolidated subsidiaries. When we refer to our “senior Carlyle
professionals,” we are referring to the partner-level personnel of our firm. References in this Annual Report on Form 10-K to
the ownership of the senior Carlyle professionals include the ownership of personal planning vehicles of these individuals.
When we refer to the “Carlyle Holdings partnerships” or “Carlyle Holdings,” we are referring to Carlyle Holdings I L.P.,
Carlyle Holdings II L.P., and Carlyle Holdings III L.P., which prior to the Conversion were the holding partnerships through
which the Company and our senior Carlyle professionals and other holders of Carlyle Holdings partnership units owned their
respective interests in our business.
“Carlyle funds,” “our funds” and “our investment funds” refer to the investment funds and vehicles advised by Carlyle.
“Carry funds” generally refers to closed-end investment vehicles, in which commitments are drawn down over a
specified investment period, and in which the general partner receives a special residual allocation of income from limited
partners, which we refer to as carried interest, in the event that specified investment returns are achieved by the fund.
Disclosures referring to carry funds will also include the impact of certain commitments that do not earn carried interest but are
either part of or associated with our carry funds. The rate of carried interest, as well as the share of carried interest allocated to
Carlyle, may vary across the carry fund platform. Carry funds generally include the following investment vehicles across our
three business segments:
•Global Private Equity: Buyout, middle market and growth capital, real estate, infrastructure, and natural resources
funds advised by Carlyle, as well as certain energy funds advised by our strategic partner NGP Energy Capital
Management (“NGP”) in which Carlyle is entitled to receive a share of carried interest (“NGP Carry Funds”);
•Global Credit: Opportunistic credit, aviation finance, and other closed-end credit funds advised by Carlyle; and
•Global Investment Solutions: Funds and vehicles advised by AlpInvest Partners B.V. and its affiliates
(“AlpInvest”), which include primary fund, secondary and portfolio financing, and co-investment strategies.
Carry funds specifically exclude certain legacy Abingworth funds in which Carlyle is not entitled to receive a share of
carried interest, collateralized loan obligation vehicles (“CLOs”), our business development companies and associated managed
accounts, as well as capital raised from strategic third-party investors which directly invest in Fortitude (defined below)
alongside a carry fund.
5
For an explanation of the fund acronyms used throughout this Annual Report on Form 10-K, refer to Item 1
“Business–Our Global Investment Offerings.”
“Fortitude” refers to FGH Parent, L.P. (“FGH Parent”), the direct parent of Fortitude Group Holdings, LLC
(“Fortitude Holdings”). See Note 4, Investments, to the consolidated financial statements in Part II, Item 8 of this Annual
Report on Form 10-K for more information regarding the Company’s strategic investment in Fortitude.
“Fee-earning assets under management” or “Fee-earning AUM” refers to the assets we manage or advise from which
we derive recurring fund management fees. Our Fee-earning AUM is generally based on one of the following, once fees have
been activated:
(a)the amount of limited partner capital commitments, generally for carry funds where the original investment period has
not expired and for AlpInvest carry funds during the commitment fee period;
(b)the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-investment
vehicles where the original investment period has expired;
(c)the amount of aggregate fee-earning collateral balance of our CLOs and other securitization vehicles, as defined in the
fund indentures (pre-2020 CLO vintages are generally exclusive of equities and defaulted positions) as of the quarterly
cut-off date;
(d)the external investor portion of the net asset value of certain carry funds;
(e)the fair value of Fortitude’s general account assets invested under the strategic advisory services agreement;
(f)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business
development companies and certain carry funds; or
(g)the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee
period has expired and certain carry funds where the investment period has expired.
“Assets under management” or “AUM” refers to the assets we manage or advise. Our AUM generally equals the sum
of the following:
(a) the aggregate fair value of our carry funds and related co-investment vehicles, and separately managed accounts, plus
the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to
those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital
commitments to those funds and vehicles;
(b) the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs
and other structured products (inclusive of all positions);
(c) the net asset value of certain carry funds;
(d)the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement; and
(e) the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that
Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those
vehicles.
We include in our calculation of AUM and Fee-earning AUM the NGP Carry Funds that are advised by NGP. Our
calculation of AUM also includes third-party capital raised for the investment in Fortitude through a Carlyle-affiliated
investment fund and from strategic investors which directly invest in Fortitude alongside the fund. The total AUM and Fee-
earning AUM related to the strategic advisory services agreement with Fortitude is inclusive of the net asset value of
investments in Carlyle products. These amounts are also reflected in the AUM and Fee-earning AUM of the strategy in which
they are invested.
6
For most of our carry funds, total AUM includes the fair value of the capital invested, whereas Fee-earning AUM
includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original
investment period for the fund has expired. As such, Fee-earning AUM may be greater than total AUM when the aggregate fair
value of the remaining investments is less than the cost of those investments.
Our calculations of AUM and Fee-earning AUM may differ from the calculations of other asset managers. As a result,
these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of
AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment
funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management
fees, incentive fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition
of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.
“Performance Fee Eligible AUM” represents the AUM of funds for which we are entitled to receive performance
allocations, inclusive of the fair value of investments in those funds (which we refer to as “Performance Fee Eligible Fair
Value”) and their Available Capital. Performance Fee Eligible Fair Value is “Performance Fee-Generating” when the associated
fund has achieved the specified investment returns required under the terms of the fund’s agreement and is accruing
performance revenue as of the quarter-end reporting date. Funds whose performance allocations are treated as fee related
performance allocations are excluded from these metrics.
“Perpetual Capital” refers to the assets we manage or advise which have an indefinite term and for which there is no
immediate requirement to return capital to investors upon the realization of investments made with such capital, except as
required by applicable law. Perpetual Capital may be materially reduced or terminated under certain conditions, including
reductions from changes in valuations and payments to investors, including through elections by investors to redeem their
investments, dividend payments, and other payment obligations, as well as the termination of or failure to renew the respective
investment advisory agreements. Perpetual Capital includes: (a) assets managed under the strategic advisory services agreement
with Fortitude, (b) our Core Plus real estate fund, (c) our business development companies and certain other direct lending
products, (d) Carlyle Tactical Private Credit Fund (“CTAC”), (e) our closed-end tender offer Carlyle AlpInvest Private Markets
(“CAPM”) funds, and (f) certain other structured credit products.
“Legacy Energy Funds” include Energy III, Energy IV, and Renew II and are managed with Riverstone and its
affiliates. The investment periods for these funds have expired and the remaining investments in each fund are being disposed
of in the ordinary course of business. The impact of these funds is no longer significant to our results of operations.
“Metropolitan” or “MRE” refers to Metropolitan Real Estate Management, LLC, which was included in the Global
Investment Solutions business segment prior to its sale on April 1, 2021.
7
PART I.
ITEM 1.BUSINESS
Overview
Carlyle is a global investment firm with deep industry expertise that deploys private capital across three business
segments: Global Private Equity, Global Credit, and Global Investment Solutions. Our teams invest across a range of strategies
that leverage our deep industry expertise, local insights, and global resources to deliver attractive returns throughout an
investment cycle. Since our firm was founded in Washington, D.C. in 1987, we have grown to manage $441 billion in AUM as
of December 31, 2024. Our experienced and diverse team of more than 2,300 employees includes more than 725 investment
professionals in 29 offices across four continents, and we serve more than 3,100 active carry fund investors from 87 countries.
We seek to invest with a clarity of purpose, adaptability, and alignment between our interests and the interests of our
fund investors, shareholders, and other stakeholders.
Operational and strategic highlights for our firm and our three global business segments for 2024 include:
•Assets under management grew 4% to $441 billion as of December 31, 2024 from $426 billion as of
December 31, 2023. The increase was driven by inflows of $40.8 billion during 2024, consisting entirely of
fundraising activity which increased 10% from 2023. We deployed $42.7 billion across our platform during
2024—including invested capital in our carry funds, new CLO issuances and incremental capital raised from
CLO resets, and gross originations—and we realized proceeds of $28.6 billion for our carry fund investors.
•We returned more than $1 billion in capital to our shareholders. During 2024, we paid dividends to our
common shareholders of $503 million, and $555 million to repurchase 9.0 million shares of our common
stock and retire 3.3 million shares of our common stock in connection with the net share settlement of equity-
based awards.
•In our Global Private Equity (“GPE”) segment, we realized proceeds of $17.8 billion for our carry fund
investors in 2024 through both private market and public equity transactions, and deployed $8.2 billion across
the segment. During 2024, inflows of $12.7 billion reflected fundraising across the segment, including the
launch of our tenth U.S. real estate fund (“CRP X”) and additional commitments to our fifth Japan buyout
fund (“CJP V”), which is nearly 70% larger than its predecessor fund.
•Our Global Credit (“GC”) AUM increased 2% year-over-year to $192 billion, driven by inflows of $17.3
billion across a diverse set of strategies, including the closing of ten new CLOs in liquid credit, the final
closing in our third opportunistic credit fund (“CCOF III”), and record gross subscriptions in Carlyle Tactical
Private Credit Fund (“CTAC”), which more than doubled its AUM over the last two years. Our Global
Capital Markets strategy also had a record year, and was the primary driver of $152.5 million of portfolio
advisory and transaction fees for the year ended December 31, 2024, more than double the amount earned in
2023.
•In our Global Investment Solutions segment, total AUM increased 11% year-over-year to $85 billion, driven
by $10.8 billion of inflows primarily from fundraising in our secondaries and portfolio finance and CAPM
funds. Following the launch of Carlyle AlpInvest Private Markets Fund during 2023, we launched its
European counterpart fund during 2024 (together, the “CAPM funds” or “CAPM”). We deployed $10.0
billion in investments across our Global Investment Solutions platform and we realized proceeds of $6.6
billion for our Global Investment Solutions investors.
Business Segments
We operate our business across three segments: Global Private Equity, Global Credit, and Global Investment
Solutions. Information about our segments should be read together with Part II, Item 7 “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”
8
Global Private Equity
Our GPE segment advises our buyout, growth, real estate, infrastructure, and natural resources funds. Across our GPE
funds, as of December 31, 2024, we had investments in more than 275 active portfolio companies that employ over 750,000
people around the world. Our GPE teams have the following areas of focus:
Corporate Private Equity. Our corporate private equity teams advise a diverse group of funds that invest in
transactions that focus either on a particular geography or strategy. Our buyout funds focus on corporate buyouts and strategic
minority investments. The investment mandate for our growth capital funds is to seek out companies with the potential for
disruptive growth. Our core strategy seeks longer duration private equity opportunities, targeting stable businesses with
sustainable market leadership, which have opportunities for operational improvement. Our corporate private equity funds are
advised by teams of local professionals who live and work in the markets where they invest. In 2024, we invested $5.0 billion
in new and follow-on investments through our corporate private equity funds. As of December 31, 2024, our corporate private
equity funds had, in the aggregate, $105.2 billion in AUM.
Real Estate. Our real estate team advises real estate funds that invest in the U.S. and Europe, with a focus on a broad
range of opportunities including residential properties, senior living facilities, industrial properties, and self-storage properties,
but have limited our exposure to office buildings, hotels, and retail properties. Our real estate funds generally focus on
acquiring single-property assets rather than large-cap companies with real estate portfolios and made more than 1,650
investments in more than 800 cities or metropolitan statistical areas around the world from inception through December 31,
2024. As of December 31, 2024, our real estate funds managed, in the aggregate, $34.4 billion in AUM.
Infrastructure & Natural Resources. Our active infrastructure and natural resources funds focus on infrastructure and
energy investing. Our infrastructure business comprises teams that invest in six primary sectors: renewables, energy
infrastructure, water and waste, transportation, digital infrastructure, and power generation. Our energy activities focus on
buyouts, growth capital investments and strategic joint ventures in the midstream, upstream, downstream, energy and oilfield
services sectors around the world. Our international energy investment team focuses on investments across the energy value
chain outside of North America. We conduct our North American energy investing through our strategic investment in NGP, a
Texas-based energy investor. As of December 31, 2024, we managed $24.0 billion in AUM through our infrastructure and
natural resources funds.
The following table presents certain data about our Global Private Equity segment as of December 31, 2024 (dollar
amounts in billions).
AUM(1) | % of Total AUM | Fee-earning AUM | Active Investments | Active Funds(1) | Available Capital | Investment Professionals(2) | Amount Invested Since Inception | Investments Since Inception | ||||||||
$164 | 37% | $98 | 950+ | 71 | $41 | 425+ | $230 | 2,650+ |
(1)Total AUM includes NGP, which advises eight funds with $10.6 billion in AUM as of December 31, 2024. Through our strategic
partnership with NGP, we are entitled to 55% of the management fee related revenue of the NGP entities that serve as advisors to the
NGP Energy Funds, and an allocation of income related to the carried interest received by the fund general partners of the NGP Carry
Funds. We do not control NGP, and we do not serve as an investment adviser to the NGP funds.
(2)Total GPE investment professionals excludes NGP employees.
Global Credit
Our Global Credit segment, which had $192.4 billion in assets under management as of December 31, 2024, advises
products that pursue investment strategies across the credit spectrum, including: liquid credit, private credit, including
opportunistic credit, direct lending, and real assets credit, as well as platform initiatives such as CTAC and asset-backed
finance. Global Credit, which also includes our Insurance Solutions and Global Capital Markets businesses, has been Carlyle’s
fastest-growing segment in the past five years, with total AUM nearly quadrupling in that period. Since the establishment of
Global Credit in 1999, these various capital sources have provided the opportunity for Carlyle to offer highly customizable and
creative financing solutions to borrowers to meet their specific capital needs. Carlyle draws on the expertise and underwriting
capabilities of our more than 190 investment professionals and leverages the resources and industry expertise of Carlyle’s
global network to provide creative solutions for borrowers.
9
Primary areas of focus for our Global Credit platform include:
Insurance Solutions
•Carlyle Insurance Solutions. Carlyle Insurance Solutions (“CIS”) combines our deep insurance expertise with
portfolio construction capabilities, capital sourcing and asset origination strengths to provide comprehensive
liability funding and reinsurance, asset management and advisory solutions for reinsurance companies and fund
investors. The CIS team oversees the investment in Fortitude, as well as the strategic advisory services agreement
with certain subsidiaries of Fortitude. As of December 31, 2024, AUM related to capital raised from third-party
investors to acquire a controlling interest in Fortitude was $6.0 billion. As of December 31, 2024, AUM related to
the strategic advisory services agreement was $70.9 billion, which has increased nearly 50% since signing the
agreement in April 2022. This balance includes the net asset value of investments in Carlyle products, which is
also reflected in the AUM and Fee-earning AUM of the strategy in which they are invested. Fortitude and certain
Fortitude reinsurance counterparties have committed approximately $19.4 billion of capital to-date to various
Carlyle strategies.
Liquid Credit
•Our liquid credit products invest primarily in performing senior secured bank loans through CLOs and other
investment vehicles. In 2024, we closed ten new CLOs with an aggregate size of $4.8 billion. As of December 31,
2024, our liquid credit team advised funds with AUM totaling $50.0 billion.
Private Credit
•Opportunistic Credit. Our opportunistic credit team invests primarily in highly-structured and privately-negotiated
capital solutions supporting corporate borrowers through secured loans, senior subordinated debt, mezzanine debt,
convertible notes, and other debt-like instruments, as well as preferred and common equity. The team will also
look to invest in special situations (i.e., event-driven opportunities that exhibit hybrid credit and equity features) as
well as market dislocations (i.e., primary and secondary market investments in liquid debt instruments that arise as
a result of temporary market volatility). In certain investments, our funds may seek to restructure pre-
reorganization debt claims into controlling positions in the equity of the reorganized companies. As of
December 31, 2024, our opportunistic credit team advised products totaling $19.5 billion in AUM.
•Direct Lending. Our direct lending business includes our business development companies (“BDCs”) that invest
primarily in middle market first-lien loans (which include unitranche, “first out” and “last out” loans) and second-
lien loans of middle-market companies, typically defined as companies with annual EBITDA ranging from $25
million to $100 million, that lack access to the broadly syndicated loan and bond markets. As of December 31,
2024, our direct lending investment team advised investment vehicles with AUM totaling $10.9 billion.
•Asset-Backed Finance. Asset-backed finance (“ABF”) is an asset-backed, private fixed income investment
strategy within Global Credit that seeks to generate a premium return profile compared to traditional fixed income
and credit investments by acquiring and lending against diversified pools of assets with contractual cash flows.
ABF combines Carlyle’s long-standing history in liquid credit, private asset underwriting expertise, and capital
markets capabilities, to deliver tailored asset-focused financing solutions across the entire debt and equity capital
structure. As of December 31, 2024, ABF represented $7.6 billion in AUM.
•Aviation Finance. Carlyle Aviation Partners is our multi-strategy investment platform that is engaged in
commercial aviation aircraft financing and investment throughout the commercial aviation industry. As of
December 31, 2024, Carlyle Aviation Partners had approximately $12.6 billion in AUM across carry funds,
securitization vehicles, liquid strategies, and other vehicles.
•Infrastructure Credit. Our Infrastructure credit team invests primarily in directly originated and privately
negotiated debt instruments related to global infrastructure projects, primarily in the power, energy, transportation,
water/waste, telecommunications and social infrastructure sectors. The team focuses primarily on senior,
subordinated, and mezzanine debt and seeks to invest primarily in developed markets within the Organization for
Economic Cooperation and Development (“OECD”). As of December 31, 2024, our Infrastructure credit team
managed $5.9 billion in AUM.
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•Cross-Platform Credit Products. Our platform initiatives include CTAC, our closed-end interval fund that invests
across Carlyle’s entire credit platform, as well as cross-platform separately managed accounts that are tailored to
invest across Carlyle’s credit platform based on the specific investment needs of individual investors. As of
December 31, 2024, the Global Credit platform initiatives represented $8.1 billion in AUM.
Global Capital Markets
•Carlyle Global Capital Markets. Carlyle Global Capital Markets (“GCM”) is a loan syndication and capital
markets business that launched in 2018. The primary focus of GCM is to arrange, place, underwrite, originate and
syndicate loans and underwrite and place securities of third parties and Carlyle portfolio companies through TCG
Capital Markets and TCG Senior Funding. TCG Capital Markets is a FINRA registered broker dealer. GCM may
also act as the initial purchaser of such loans and securities. GCM receives fees, including underwriting,
placement, structuring, transaction and syndication fees, commissions, underwriting and original issue discounts,
interest payments and other compensation, which may be payable in cash or securities or loans, in respect of the
activities described above and may elect to waive such fees.
The following table presents certain data about our Global Credit segment as of December 31, 2024 (dollar amounts in
billions).
AUM | % of Total AUM | Fee-earning AUM | Available Capital | Active Funds | Investment Professionals | |||||
$192 | 44% | $154 | $18 | 142 | 190+ |
Global Investment Solutions
Our Global Investment Solutions segment, established in 2011, provides comprehensive investment opportunities and
resources for our investors and clients to build private equity portfolios through fund of funds, secondary purchases or
financings of existing portfolios and managed co-investment programs. Investors can also invest across our platform through
our closed-end tender offer CAPM funds, which have $1.9 billion in AUM as of December 31, 2024. Global Investment
Solutions executes these activities through AlpInvest, one of the world’s largest investors in private equity.
The primary areas of focus for our Global Investment Solutions teams include:
•Private Equity Secondary and Portfolio Finance Investments. Funds managed by AlpInvest build an investment
portfolio of private equity owned assets through the acquisition of limited partnership interests in the secondary
market and other types of transactions such as fund recapitalizations, portfolio restructurings and spin-outs, and
portfolio financings. Private equity investors who desire to sell or restructure their pre-existing investment
commitments to a fund may negotiate to sell the fund interests to AlpInvest. In this manner, AlpInvest’s secondary
and portfolio finance investments team provides the full range of liquidity and restructuring solutions from debt to
equity for third-party private equity investors. As of December 31, 2024, our secondary and portfolio finance
investments program totaled $37.1 billion in AUM.
•Private Equity Co-investments. AlpInvest invests alongside other private equity and mezzanine funds in which it
or certain AlpInvest limited partners typically has a primary fund investment throughout Europe, North America
and Asia. These investments are generally made when an investment opportunity is too large for a particular fund
and the sponsor of the fund therefore seeks to raise additional “co-investment” capital from sources such as
AlpInvest. As of December 31, 2024, our co-investment programs totaled $22.2 billion in AUM.
•Private Equity Fund Investments. Our fund of funds vehicles advised by AlpInvest make investment commitments
directly to buyout, growth capital, venture and other alternative asset funds advised by other general partners. As
of December 31, 2024, AlpInvest advised $23.9 billion in AUM in private equity fund investments.
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The following table presents certain data about our Global Investment Solutions segment as of December 31, 2024
(dollar amounts in billions).
AUM | % of Total AUM | Fee-earning AUM | Fund Vehicles | Available Capital | Investment Professionals | Amount Invested Since Inception | ||||||
$85 | 19% | $52 | 423 | $25 | 100+ | $98 |
Investment Approach
Global Private Equity
The investment approach of our GPE teams is generally characterized as follows:
•Consistent and Disciplined Investment Process. We believe our successful investment track record is the result, in
part, of a consistent and disciplined application of our investment process. Investment opportunities for our GPE
funds are initially sourced and evaluated by one or more of our deal teams. Deal teams consistently strive to be
creative and look for deals in which we can leverage Carlyle’s competitive advantages, sector experience, and
global platform. The due diligence and transaction review process places a special emphasis on, as appropriate and
among other considerations, the reputation of a target company’s shareholders and management, the company’s or
asset’s size and sensitivity of cash flow generation, the business sector and competitive risks, the portfolio fit, exit
risks, and other key factors specific to a particular investment. In evaluating each deal, we consider what expertise
or experience we can bring to the transaction to enhance value for our investors. Each investment opportunity
must secure approval from the investment committee of the applicable investment fund to move forward. To help
ensure consistency, we utilize a standard investment committee process across our GPE funds, although NGP
follows its own policies and procedures with respect to its advised funds. The investment committee approval
process involves a detailed review of the transaction and investment thesis, business, risk factors and diligence
issues, as well as financial models.
•Distinctive Portfolio Construction Principles. We seek to proactively manage the construction of our portfolios
through deliberate and thoughtful diversification across industries, geographies and cycles, and to avoid certain
assets facing economic or industry headwinds. For example, our real estate portfolios have relatively little current
exposure to commercial office properties, business hotels, and retail properties.
•Geographic- and Industry-Focused. We have developed a global network of local investment teams and have
adopted an industry-focused approach to investing. Our extensive network of global investment professionals has
the knowledge, experience and relationships on a local level that allows them to identify and take advantage of
opportunities that may be unavailable to firms that do not have our global reach and resources. We believe that our
global platform helps enhance all stages of the investment process, including by facilitating faster and more
effective diligence, a deeper understanding of global industry trends and priority access to the capital markets. We
have particular industry expertise in aerospace and government services, consumer, media and retail, financial
services, healthcare, industrials, technology, real estate, natural resources, and infrastructure. As a result, we
believe that our in-depth knowledge of specific industries improves our ability to source and create transactions,
conduct effective and more informed due diligence, develop strong relationships with management teams and use
contacts and relationships within these industries to drive value creation.
•Variable Deal Sizes and Creative Structures. We believe that having the resources to complete investments of
varying sizes provides us with the ability to enhance investment returns while providing for prudent industry,
geographic and size diversification. Our teams are staffed not only to effectively pursue large transactions, but
also other transactions of varying sizes. We often invest in smaller companies or single real estate transactions and
this has allowed us to obtain greater diversity across our entire portfolio. Additionally, we may undertake large,
strategic minority investments with certain control elements or private investment in public equity (PIPE)
transactions in large companies with a clear exit strategy. In certain jurisdictions around the world, we may make
investments with little or no debt financing and seek alternative structures to opportunistically pursue transactions.
We generally seek to obtain board representation and typically appoint our investment professionals and advisors
to represent us on the boards of the companies in which we invest. Where our funds, either alone or as part of a
consortium, are not the controlling investor, we typically, subject to applicable regulatory requirements, acquire
significant voting and other control rights with a view to securing influence over the conduct of the business.
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•Driving Value Creation. Our GPE teams seek to make investments in portfolio companies and assets in which our
particular strengths and resources may be employed to their best advantage. Typically, as part of a GPE
investment, our investment teams will prepare and execute a systematic value creation plan that is developed
during a thorough due diligence effort and draws on the deep resources available across our global platform,
specifically relying on:
◦Reach. Our global team and global presence enables us to support international expansion of our operating
companies’ efforts and global supply chain initiatives.
◦Expertise. Our deep bench of investment professionals and industry specialists provide extensive sector-
specific knowledge and local market expertise. Our investment teams benefit from best-in-class support
services and infrastructure provided through the global Carlyle organization. Carlyle’s overall infrastructure
and support services cover the full range of administrative functions, including fund management, accounting,
legal and compliance, human resources, information technology, tax, and external affairs. Additionally, where
appropriate we may seek to partner with third parties whose sector or market expertise may enhance our value
creation in an investment. For example, in our U.S. real estate funds we may partner with joint venture
partners or managers with significant operational expertise and/or deal sourcing capabilities.
◦Insights. To supplement our investment expertise, we retain a group of approximately 45 operating executives
and advisors as independent consultants to work with our investment teams, provide board-level governance
and support and advise our portfolio companies. These operating executives and advisors are typically former
CEOs and other high-level executives of some of the world’s most successful corporations and currently sit
on the boards of directors of a diverse mix of companies. Operating executives and advisors are independent
consultants and are not Carlyle employees. Operating executives and advisors are often engaged by Carlyle
primarily to assist with deal sourcing, due diligence and market intelligence. Operating executives and
advisors may also be engaged and compensated by our portfolio companies as directors or to otherwise advise
portfolio company management.
◦Data. The goal of our research function is to extract as much information as possible from our portfolio about
the current state of the economy and its likely evolution over the near-to-medium term. Our corporate private
equity investment portfolio includes 190 active corporate investments as of December 31, 2024, across a
diverse range of industries and geographies that each generate multiple data points (e.g., orders, shipments,
production volumes, occupancy rates, bookings). By evaluating this data on a systematic basis, we work to
identify the data with the highest correlation with macroeconomic data and map observed movements in the
portfolio to anticipated variation in the economy, including changes in growth rates across industries and
geographies. We incorporate this proprietary data into our investment portfolio management strategy and exit
decisions on an ongoing basis. We believe this robust data gives us an advantage over our peers who do not
have as large of a global reach. Additionally, we are leveraging technological innovations and Artificial
Intelligence tools which offer operational efficiency potential across the deal life cycle from sourcing and
diligence, all the way through to exits. These tools allow our deal teams to operate more efficiently by
democratizing access to data analysis and automating more routine tasks allowing teams more time to focus
on the key issues and drive greater investment insights.
◦Talent and Organization Performance. Our investment professionals work to enhance leadership and
organizational effectiveness through proprietary and third-party data-driven assessments, best-practice
playbooks, and knowledge-sharing forums.
◦Pursuing Best Exit Alternatives. In determining when to exit an investment, our investment teams consider
whether a portfolio company or asset has achieved its objectives, the financial returns (including gross and net
MOIC and IRR) and the appropriate timing in industry cycles and company or asset development to strive for
the optimal value. Each fund’s investment committee approves all exit decisions.
◦Value Creation. Our Global Portfolio Solutions team helps to translate our collaborative culture into services
and operational capabilities supporting our investment process and portfolio companies and assets. Our
approach ensures that Carlyle’s global network, deep industry knowledge, and operational expertise are used
to support and enhance our investments.
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▪Information Technology Resources. We have established an information technology capability that
contributes to due diligence, portfolio company strategy and portfolio company operations. The
capability includes dedicated information technology and business process resources, including
assistance with portfolio company risk assessments and enhanced deal analytics.
▪Digital. Given the increasing importance of digital tools and resources across the global economy,
we have established a dedicated group focused exclusively on identifying, developing and
implementing digital transformation strategies to help drive growth, unlock value, and drive
efficiencies across our portfolio companies.
▪Procurement. We have developed a leveraged purchasing effort to provide portfolio companies with
effective sourcing programs with better pricing and service levels to help create operating value.
This program seeks to drive down costs and provide better service on common indirect spend
categories and disseminate best practices on managing functional spend in the areas of human capital
management, employee benefits, corporate real estate, information technology and treasury and risk.
As of December 31, 2024, over 60 portfolio companies are actively participating in the optional
program, benefiting from more than 100 category arrangements and preferred vendor arrangements.
▪Sustainability. As a responsible global organization dedicated to driving value, Carlyle has invested
in a framework and the necessary resources for understanding, monitoring, and managing material
environmental, social, and governance (“ESG”) risks and opportunities across our portfolio. We
believe ESG integration provides an additional lens to help us assess and mitigate risks and identify
and capitalize on potential opportunities.
Global Credit
The investment approach of our Global Credit platform is generally characterized as follows:
•Source Investment Opportunities. Our Global Credit team sources investment opportunities from both the primary
and secondary markets through our global network and strong relationships with the financial community. We
typically target portfolio companies that have a demonstrated track record of profitability, market leadership in
their respective niche, predictable cash flow, a definable competitive advantage and products or services that are
value-added to their customer base.
•Conduct Fundamental Due Diligence and Perform Capital Structure Analyses. After an opportunity is identified,
our Global Credit investment professionals conduct fundamental due diligence to determine the relative value of
the potential investment and capital structure analyses to determine credit worthiness. Our due diligence approach
typically incorporates meetings with management, company facility visits, discussions with industry analysts and
consultants and an in-depth examination of financial results and projections. In conducting due diligence, our
Global Credit team employs an integrated, cross-platform approach with industry-dedicated credit research
analysts and non-investment grade expertise across the capital structure. Our Global Credit team also seeks to
leverage resources from across the firm, utilizing information obtained from our more than 275 active portfolio
companies and lending relationships, credit industry research team, in-house government affairs and economic
research, and ESG teams.
•Evaluation of Macroeconomic Factors. Our Global Credit team evaluates technical factors such as supply and
demand, the market’s expectations surrounding a company and the existence of short- and long-term value
creation or destruction catalysts. Inherent in all stages of credit evaluation is a determination of the likelihood of
potential catalysts emerging, such as corporate reorganizations, recapitalizations, asset sales, changes in a
company’s liquidity and mergers and acquisitions.
•Risk Minimization. Our Global Credit team seeks to make investments in companies that are well-positioned to
weather downturns and/or below-plan performance. The team works to structure investments with strong financial
covenants, frequent reporting requirements and board representation, if possible. Through board representation or
observation rights, our Global Credit team works to provide a consultative, interactive approach to equity sponsors
and management partners as part of the overall portfolio management process. In our CLO business, our liquid
credit team uses an in-house risk and analytics platform to monitor and analyze our portfolio, and repositions the
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portfolio as appropriate. The analytics platform is also used to generate sensitivity analysis for critical risk factors
such as default rates, prepayment rates and liquidation prices.
Global Investment Solutions
Our Global Investment Solutions team aims to apply a wide array of capabilities to help clients meet their investment
objectives. The investment approach of our Global Investment Solutions platform is generally characterized as follows:
•Well-Informed, Disciplined Investment Process. We follow a disciplined, highly-selective investment process and
seek to achieve diversification by deploying capital across economic cycles, segments and investment styles. Our
integrated and collaborative culture across our strategies, reinforced by investment in information technology
solutions, provides deep insight into fund manager portfolios and operations to support our rigorous selection
process.
•Proactive Sourcing. AlpInvest’s extensive network of private equity managers across the globe positions us to
identify investment opportunities that may be unavailable to other investors. Our investment strategy is defined by
a strong belief that the most attractive opportunities are found in areas that are subject to fewer competitive
pressures. As a result, our teams actively seek out proprietary investments that would otherwise be difficult for our
investors to access alone.
•Global Scale and Presence. Our scale and on-the-ground presence across three continents—Asia, Europe and
North America—give us a distinct and comprehensive perspective on the private equity markets. Our stable,
dedicated, and experienced teams have deep knowledge of their respective markets across the globe. We believe
this enhances our visibility across the global investment market and provides detailed local information that
enhances our investment evaluation process.
Our Global Investment Offerings
The following table provides a breakout of the product offerings and related acronyms included in our total assets
under management of $441 billion as of December 31, 2024 for each of our three global business segments (in billions):
Global Private Equity | $163.5 | Global Credit | $192.4 | |
Corporate Private Equity | $105.2 | Insurance Solutions 4 | $76.9 | |
U.S. Buyout (CP) | 53.5 | Liquid Credit | $50.0 | |
Asia Buyout (CAP) | 11.8 | U.S. CLOs | 36.6 | |
Europe Buyout (CEP) | 10.1 | Europe CLOs | 9.1 | |
Carlyle Global Partners (CGP) | 7.2 | CLO Investment Products | 2.3 | |
Europe Technology (CETP) | 5.7 | Revolving Credit | 2.0 | |
Japan Buyout (CJP) | 5.4 | Private Credit | $65.5 | |
U.S. Growth (CP Growth / CEOF) | 3.0 | Opportunistic Credit (CCOF / CSP) | 19.5 | |
Life Sciences (ABV / ACCD) | 1.9 | Aviation (SASOF / CALF) | 12.6 | |
Asia Growth (CAP Growth / CAGP) | 1.2 | Direct Lending 5 | 10.9 | |
Other 1 | 5.4 | Platform Initiatives (incl. CTAC) | 8.1 | |
Real Estate | $34.4 | Asset-Backed Finance | 7.6 | |
U.S. Real Estate (CRP) | 23.8 | Infrastructure (CICF) | 5.9 | |
Core Plus Real Estate (CPI) | 7.6 | Other 6 | 0.8 | |
International Real Estate (CER) | 3.1 | |||
Infrastructure & Natural Resources | $24.0 | Global Investment Solutions | $85.1 | |
NGP Energy 2 | 10.6 | Secondaries and Portfolio Finance (ASF / ASPF) | $37.1 | |
Infrastructure & Renewable Energy 3 | 7.5 | Co-Investments (ACF) | $22.2 | |
International Energy (CIEP) | 5.9 | Primary Investments & Other 7 | $25.8 | |
Note: All amounts shown represent total assets under management as of December 31, 2024, and totals may not sum due to rounding. In
addition, certain carry funds included herein may not be included in fund performance if they have not made an initial capital call or
commenced investment activity.
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(1)Includes our Financial Services (CGFSP), Sub-Saharan Africa Buyout (CSSAF), South America Buyout (CSABF), Peru Buyout (CPF),
MENA Buyout and Ireland Buyout (CICF) funds, as well as platform accounts which invest across Corporate Private Equity strategies.
(2)NGP Energy funds are advised by NGP Energy Capital Management, LLC, a separately registered investment adviser. We do not serve as
an investment adviser to those funds.
(3)Includes our Infrastructure (CGIOF), Renewable Energy (CRSEF) and Power funds (CPP / CPOCP).
(4)Includes Carlyle FRL, capital raised from strategic third-party investors which directly invest in Fortitude alongside Carlyle FRL, as well
as the fair value of the general account assets covered by the strategic advisory services agreement with Fortitude.
(5)Includes our business development companies (CSL / CARS) and our evergreen fund (CDLF).
(6)Includes our Energy Credit (CEMOF) and Real Estate Credit (CNLI) funds.
(7)Includes Mezzanine and Carlyle AlpInvest Private Markets (CAPM) funds.
Organizational Structure
On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P.
into a Delaware corporation named The Carlyle Group Inc. Our common stockholders are entitled to one vote per share and to
vote on all matters on which stockholders of a corporation are generally entitled to vote on under Delaware General Corporation
Law (“DGCL”), including the election of our Board of Directors.
In connection with the Conversion, senior Carlyle professionals and certain of the other former limited partners of
Carlyle Holdings who became holders of shares of common stock in connection with the Conversion were generally required to
grant an irrevocable proxy to Carlyle Group Management L.L.C., which is wholly owned by our founders and other senior
Carlyle professionals. See Item 1A “Risk Factors—Risks Related to Our Common Stock—Carlyle Group Management L.L.C.
has significant influence over us and its interests may conflict with ours or yours.”
Investor Relations
Our diverse and sophisticated investor base includes more than 3,100 active carry fund investors located in 87
countries. Included among our many longstanding fund investors are pension funds, sovereign wealth funds, insurance
companies and high net worth individuals in the United States, Asia, Europe, the Middle East, and South America.
We have a dedicated investor relations team that strives to cultivate long-term, strategic partnerships with our limited
partners. Our team combines strong segment sales with firm-level strategy and coordination to bring the best of Carlyle to our
limited partners. In addition, our team consists of a combination of geographically focused professionals and dedicated product
specialists who collaborate to deliver on investor needs. Investor relations also is supported by a central team responsible for
data analytics and additional fulfillment responsibilities. Moreover, our Global Wealth team is dedicated to fundraising in the
private wealth channel globally and is organized regionally within each of its three constituent segments: Registered Investment
Advisors, Wirehouse and Independent Broker Dealers, and Strategic Accounts. Global Wealth also includes dedicated
marketing, product development, and support professionals who help drive fundraising efforts. We manage over $9 billion in
AUM in Global Wealth products as of December 31, 2024.
Our investor relations professionals are in regular dialogue with our fund investors, enabling us to monitor investor
preferences and tailor future fund offerings to meet investor demand. We seek to secure a first-mover advantage with key
investors, often by establishing a local presence and providing a broad and diverse range of investment opportunities. In
addition, we endeavor to expand our partnerships by sharing our insights and perspectives on the market and investment
environment, as well as discussing how we can help investors achieve their objectives. We also continue to use technology to
augment our fund transparency and communication around insights, as well as facilitate consistent dialogue through both
virtual and in-person meetings and events. This partnership approach to fundraising has been critical in raising $108 billion
over the past three years, including nearly $41 billion in 2024.
As of December 31, 2024, approximately 93% of commitments (by dollar amount) were from investors who are
committed to more than one product and approximately 76% of commitments (by dollar amount) were from investors who are
committed to more than five products. We believe the loyalty of our carry fund investor base, as evidenced by our substantial
number of multi-fund relationships, enhances our ability to raise new funds and successor funds in existing strategies.
Investor Services
We have a team of more than 900 investor services professionals worldwide. The investor services group performs a
range of functions to support our investment teams, investor relations group, and the corporate infrastructure of Carlyle. Our
investor services professionals provide an important control function, ensuring that transactions are structured pursuant to
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partnership agreements, assisting in global regulatory compliance requirements, and investor reporting to enable investors to
easily monitor the performance of their investments. We have devoted substantial resources to creating comprehensive and
timely investor reports, which are increasingly important to our investor base. The investor services group also works closely
with the investment teams throughout each fund’s lifecycle, from fund formation and investments to portfolio monitoring and
fund liquidation.
Structure and Operation of Our Investment Funds
We conduct the sponsorship and management of our carry funds and other investment vehicles primarily through
limited partnerships, which are organized by us, to accept commitments and/or funds for investment from institutional investors
and high net worth individuals. In general, each investment fund that is a limited partnership, or “partnership” fund, has a
general partner that is responsible for the management and operation of the fund’s affairs and makes all policy and investment
decisions relating to the conduct of the investment fund’s business. Generally, the limited partners of such funds take no part in
the conduct or control of the business of such funds, have no right or authority to act for or bind such funds, and have no
influence over the voting or disposition of the securities or other assets held by such funds, although such limited partners may
vote on certain partnership matters, including the removal of the general partner or early liquidation of the partnership by
majority vote, as discussed below. Most of our commingled funds also have an investor advisory committee, comprising
representatives of certain limited partners, which may consider and/or waive conflicts of interest or otherwise consult with the
general partner on certain partnership matters. In the case of certain separately managed accounts advised by us, the investor,
rather than us, may control the asset or the investment decisions related thereto or certain investment vehicles or entities that
hold or have custody of such assets.
Each investment fund and, in the case of our separately managed accounts, the client, engages an investment adviser
that is registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our investment advisers
generally are entitled to a management fee from each investment fund or account for which they serve as investment advisers.
For a discussion of the management fees to which our investment advisers are entitled across our various types of investment
funds, see “Incentive Arrangements / Fee Structure” below.
Private investment funds themselves typically do not register as investment companies under the Investment Company
Act of 1940, as amended (the “1940 Act” or the “Investment Company Act”), in reliance on Section 3(c) or Section 7(d)
thereof. Section 3(c)(7) of the 1940 Act exempts from the 1940 Act’s registration requirements investment funds whose
securities, at the time of acquisition of such securities, are owned by “qualified purchasers” as defined under the 1940 Act who
purchase their interests in a private placement. Section 3(c)(1) of the 1940 Act exempts from the 1940 Act’s registration
requirements privately placed investment funds whose securities are beneficially owned by not more than 100 persons and who
purchase their interests in a private placement. In addition, under certain current interpretations of the U.S. Securities and
Exchange Commission (the “SEC”), Section 7(d) of the 1940 Act exempts from registration any non-U.S. investment fund all
of whose outstanding securities are beneficially owned either by non-U.S. residents or by U.S. residents that are qualified
purchasers and purchase their interests in a private placement. Certain of our investment funds, however, rely on other
exemptions from the 1940 Act or register as investment companies under the 1940 Act or elect to be regulated as BDCs under
the 1940 Act.
The governing agreements of the vast majority of our investment funds, other than our AlpInvest funds as discussed
further below, provide that, subject to certain conditions, a majority in interest (based on capital commitments) of third-party
investors in those funds have the right to remove the general partner of the fund for cause and/or to accelerate the liquidation
date of the investment fund without cause. In addition, the governing agreements of many of our investment funds generally
require investors in those funds to affirmatively vote to continue the commitment period in the event that certain “key persons”
in our investment funds do not provide the specified time commitment to the fund or our firm ceases to control the general
partner (or similar managing entity) or the investment adviser or ceases to hold a specified percentage of the economic interests
in the general partner (any such events, a “Key Person Event”).
With limited exceptions, our carry funds, BDCs, NGP predecessor funds, and certain other investment vehicles, are
closed-end funds. In a closed-end fund structure, once an investor makes an investment, the investor generally is not able to
withdraw or redeem its interest, except in very limited circumstances. Moreover, the governing agreement of each investment
vehicle contains restrictions on an investor’s ability to transfer its interest in the fund. In the funds we advise that offer
redemption rights, investors’ interests are usually locked up for a period of time after which investors may generally redeem
their interests on a quarterly basis, to the extent that sufficient cash is available.
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With respect to our closed-end Global Private Equity and Global Credit carry funds, investors generally agree to fund
their commitment over a period of time. For such carry funds, the commitment period generally runs until the earliest of (i) the
sixth anniversary of either the effective date (as defined in the applicable limited partnership agreement), or the initial closing
date; (ii) the fifth anniversary of the final closing date of the fund; (iii) the date the general partner cancels the investors’
obligation to fund capital contributions due to changes in applicable laws, business conditions or when at least a significant
portion (which may range between 75% and 90%) of the capital commitments to the fund have been invested, committed or
reserved for investments; (iv) the date a supermajority in interest (based on capital commitments) of investors vote to terminate
the commitment period; or (v) the occurrence of a Key Person Event, unless upon any of these events the investors vote to
continue the commitment period. Following the termination of the commitment period, an investor generally will be released
from any further obligation with respect to its undrawn capital commitment except to the extent necessary to pay partnership
expenses and management fees, fund outstanding borrowings and guarantees, complete investments with respect to transactions
committed to prior to the end of the commitment period and make follow-on investments in existing investments (collectively,
the “post-termination obligations”). Generally, an investor’s obligation to fund follow-on investments continues following the
end of the commitment period, although certain funds have a limit on when and how much the fund is permitted to fund for
such follow-on investments. In those funds where such limitations exist, they generally range from 15% to 20% of the fund’s
aggregate capital commitment.
For the latest generation of our closed-end real estate funds, the length of the commitment period varies from fund to
fund, typically running for a period of between four and five years from the final closing date, provided that the general partner
may unilaterally extend such expiration date for one year and may extend it for another year with the consent of a majority of
the limited partners for that fund. Investors in the latest generation of our closed-end real estate funds also are obligated to
continue to make capital contributions with respect to follow-on investments and to repay indebtedness for a period of time
after the original expiration date of the commitment period, as well as to fund partnership expenses and any applicable
management fees during the life of the fund.
The term of each of the closed-end Global Private Equity and Global Credit carry funds generally will end 10 years
from the initial closing date or, in some cases, from the final closing date, but such termination date may be earlier in certain
circumstances (e.g., six years, in the case of certain Carlyle Aviation Partners funds and seven years, in the case of certain
Global Credit funds) or later if extended by the general partner (in many instances with the consent of a majority in interest
(based on capital commitments) of the investors or the investment advisory committee) for successive one-year periods,
typically up to a maximum of two years. Certain of such investment funds may have a longer initial termination date (such
funds, “longer-dated funds”), such as 15 years from the final closing date, or may be open-ended.
With respect to our Global Investment Solutions vehicles and separately managed accounts, other than certain
evergreen products such as our CAPM funds, the commitment period generally runs for a period of one to five years after the
initial closing date of the vehicle and the term of each of the funds generally will end 8 to 12 years from the initial closing date.
In some cases, the termination date may be later if extended by the general partner (in many instances with the consent of a
majority in interest (based on capital commitments) of the investors or the investor advisory committee) for an additional period
of up to three years, or until such time as is reasonably necessary for the general partner to be able to liquidate the fund’s assets.
Incentive Arrangements / Fee Structure
Fund Management Fees. We provide management services to funds in which we hold a general partner interest or with
which we have an investment advisory agreement. For closed-end carry funds in the Global Private Equity segment,
management fees generally range from 1.0% to 2.0% of limited partners’ capital commitments during the fund’s commitment
period and thereafter, management fees generally are based on the lower of cost or fair value of invested capital. For closed-end
carry funds in the Global Credit segment, management fees generally range from 1.0% to 2.0% of limited partners’ invested
capital. Following the expiration or termination of the commitment period, the management fee rate may be reduced. These
terms may vary for separately managed accounts, open-end funds, and longer-dated carry funds and other closed end funds. The
investment adviser will receive management fees during a specified period of time, which generally is ten years from the initial
closing date or, in some instances, from the final closing date, but such termination date may be earlier in certain limited
circumstances or later (e.g., if extended for successive one-year periods, typically up to a maximum of two years, or until the
disposition of the last investment). The terms of the investment advisory agreement and related agreements specify the
frequency of when management fees are called (e.g., quarterly or semi-annually) and whether they are called in advance or in
arrears.
Within the Global Credit segment, for CLOs and other structured products, management fees generally range from
0.4% to 0.5% based on the total par amount of assets or the aggregate principal amount of notes in the CLO and are due
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quarterly. Management fees for the CLOs and other structured products are governed by indentures and collateral management
agreements. The investment advisers will receive management fees for the CLOs until redemption of the securities issued by
the CLOs. Management fees for the BDCs are due quarterly in arrears at annual rates that range from 1.0% of net asset value
(as adjusted for capital called, dividends reinvested, distributions paid, and issuer share repurchases made) to 1.5% of gross
assets (excluding cash and cash equivalents). Management fees for CTAC are due monthly in arrears at the annual rate of 1.0%
of the month-end value of CTAC’s managed assets. Management fees for Carlyle Capital Income Fund (“CCIF”) are due
monthly in arrears at the annual rate of 1.75% of the month-end value of CCIF’s managed assets. Carlyle Aviation Partners’
funds have varying management fee arrangements depending on the strategy of the particular fund. Under the strategic advisory
services agreement with Fortitude, the Company earns a recurring management fee based on Fortitude’s general account assets,
which adjusts within an agreed range based on Fortitude’s overall profitability and which is due quarterly in arrears.
Management fees for certain of our perpetual capital strategies and separately managed accounts in Global Credit have annual
rates that generally range from 0.10% to 0.75%, which are charged based on invested capital or the fair value of the underlying
assets, though management fee arrangements vary depending on the strategy of the particular account.
The investment advisers of our Global Investment Solutions carry funds generally receive an annual management fee
that ranges from 0.25% to 1.5% of the fund’s capital commitments or its committed capital to investments during the
commitment fee period of the relevant fund. Following the expiration of the commitment fee period, the management fees
generally range from 0.25% to 1.5% on (i) net invested capital, (ii) the lower of cost or net asset value of the capital invested, or
(iii) the net asset value for unrealized investments. Management fees are charged for the entire duration of the applicable Global
Investment Solutions carry funds based on (i) net invested capital of, (ii) net asset value of, plus unfunded commitments to, or
(iii) net invested capital of, plus unfunded commitments to, the underlying investments. The management fees we receive from
our Global Investment Solutions carry fund vehicles typically are payable quarterly in advance. The investment adviser to the
CAPM funds generally is entitled to receive a management fee equal to 1.25% on an annualized basis of the respective fund’s
net asset value, which is payable at least quarterly.
Our equity interest in NGP entitles us to an allocation of income equal to 55% of the management fee related revenues
of the NGP entities that serve as advisors to the NGP Energy Funds.
The general partners or investment advisers of certain of our Global Private Equity carry funds from time to time
receive customary transaction fees upon consummation of many of the fund’s acquisition transactions, receive monitoring fees
from many of the fund’s portfolio companies following acquisition, and may receive other fees in connection with the fund’s
activities. The ongoing monitoring fees that they receive generally are calculated either as a fixed amount or as a percentage of
a specified financial metric of a particular portfolio company. The transaction fees that they receive generally are calculated
either as a fixed amount or as a percentage (that generally ranges up to 1%, but may exceed 1% in certain circumstances) of the
total enterprise value or capitalization of the investment. The management fees charged to investors in our carry funds generally
are 100% of such funds’ allocable portions of such transaction fees, monitoring fees, and certain other fees that are received by
the general partners and their affiliates. For our most recent vintages, management fees generally are not offset by fees received
by GCM in connection with capital markets activities.
In addition, Carlyle Aviation Partners may receive servicing fees in connection with asset-backed financing
transactions for certain Carlyle Aviation Partners funds, generally in the range of 2% of rents, incentive fees up to 5% of rents
in the aggregate, and 3% of sales proceeds earned from such assets. To the extent the financing instruments are held by the
funds, these fees are generally offset against management fees of the funds.
Performance Allocations. The general partner of each of our carry funds also receives carried interest from the carry
funds. Carried interest entitles the general partner to a special residual allocation of profit on third-party capital. In the case of
our closed-end carry funds, carried interest generally is calculated on a “realized gain” basis, and each general partner is
generally entitled to a carried interest equal to 20% allocation (or approximately 2% to 12.5% in the case of most of our more
mature Global Investment Solutions carry funds) of the net realized profit (generally taking into account unrealized losses)
generated by third-party capital invested in such fund. Net realized profit or loss is not netted between or among funds. Our
senior Carlyle professionals and other personnel who work in these operations also own interests in the general partners of our
carry funds in order to better align their interests with our own and with those of the investors in the funds, and such certain
other personnel participate in a commingled carried interest pool program. Historically, we allocated a range of generally 45%
to 50% of any carried interest that we earned to those individuals and our carried interest pool program. Beginning on
December 31, 2023, we expect to allocate approximately 60% to 70% of performance allocations and incentive fees to our
personnel.
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For most carry funds, the carried interest is subject to an annual preferred return of 7% to 9% and return of certain fund
costs (generally subject to catch-up provisions as set forth in the fund limited partnership agreement). These terms may vary on
longer-dated funds, certain credit funds, and our external co-investment vehicles. If, as a result of diminished performance of
investments later in the life of a closed-end fund, the fund does not achieve investment returns that (in most cases) exceed the
preferred return threshold or (in almost all cases) the general partner receives in excess of the allocated carried interest, we will
be obligated to repay the amount by which the carried interest that previously was distributed to us exceeds amounts to which
we are ultimately entitled. This obligation, which is known as a “giveback” obligation, operates with respect to a given carry
fund’s own net investment performance only and typically is capped at the after-tax amount of carried interest received by the
general partner. Each recipient of carried interest distributions is individually responsible for his or her proportionate share of
any “giveback” obligation, and we have historically withheld a portion of the cash from carried interest distributions to
individuals as security for potential “giveback” obligations. However, we may guarantee the full amount of such “giveback”
obligation in respect of amounts received by Carlyle and certain other amounts. With respect to the portion of any carried
interest allocated to the firm, we expect to fund any “giveback” obligation from available cash. Our ability to generate carried
interest is an important element of our business and carried interest has historically accounted for a significant portion of our
income.
The receipt of carried interest in respect of investments of our carry funds is dictated by the terms of the partnership
agreements that govern such funds, which generally allow for carried interest distributions in respect of an investment upon a
realization event after satisfaction of obligations relating to the return of capital from all realized investments, any realized
losses, allocable fees and expenses, and the applicable annual preferred return. Carried interest ultimately is realized and
distributed when: (i) an underlying investment is profitably disposed of, (ii) certain costs borne by the investors have been
reimbursed, (iii) the investment fund’s cumulative realized returns are in excess of the preferred return, and (iv) we have
decided to collect carry rather than return additional capital to investors. Distributions to eligible senior Carlyle professionals in
respect of such carried interest generally are made shortly thereafter. Our decision to collect carry considers such factors as the
level of embedded valuation gains, the portion of the fund invested, the portion of the fund returned to investors, and the length
of time the fund has been in carry, as well as other qualitative measures. In substantially all cases, our Global Investment
Solutions funds are not eligible for carried interest distributions until all capital contributions for investments and expenses and
the preferred return hurdle have been returned. Although Carlyle has seldom been obligated to pay a giveback obligation, such
obligation, if any, in respect of previously realized carried interest, is determined and due upon the winding up or liquidation of
a carry fund pursuant to the terms of the fund’s partnership agreement and in many cases the giveback also is calculated at prior
intervals.
With respect to our separately managed accounts, BDCs, CCIF, our CAPM funds, and CTAC, carried interest
generally is referred to as an “Incentive Fee.” Incentive Fees consist of performance-based incentive arrangements pursuant to
management contracts when the return on AUM exceeds certain benchmark returns or other performance targets, and in certain
cases are subject to any recovered losses. Incentive Fees are recognized when the performance benchmark has been achieved.
Under our arrangements with the historical owners of Carlyle Aviation Partners, we are entitled to 100% of the
management fee related revenues and advisory fee related revenues of Carlyle Aviation Partners that serve as advisers or
service providers of the Carlyle Aviation Partners funds and portfolios of investments.
With respect to our historical arrangements with NGP, we are entitled to an allocation of income equal to 47.5%
(40.0% or 42.75% in the case of certain funds) of the carried interest received by the general partners of certain current and
future NGP Carry Funds. Pursuant to the updated employee compensation program, effective December 31, 2023, we expect to
allocate approximately 60% to 70% of performance allocations received under these arrangements to our employees.
Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any
carried interest in respect of the historical investments and commitments to our fund of funds vehicles that existed as of July 1,
2011 (including any options to increase any such commitments exercised after such date). In some instances, we are entitled to
15% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and
2020. In certain instances, carried interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in
the Netherlands. In addition, in connection with the acquisition of Abingworth, we are entitled to 15% of carried interest
generated from certain Abingworth funds.
As noted above, in connection with raising new funds or securing additional investments in existing funds, we
negotiate terms for such funds and investments with existing and potential investors. The outcome of such negotiations could
result in our agreement to terms that are materially less favorable to us than for prior funds we have advised or funds advised by
our competitors. See Item 1A “Risk Factors—Risks Related to Our Business Operations—Risks Related to the Assets We
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Manage—Our investors may negotiate to pay us lower management fees and the economic terms of our future funds may be
less favorable to us than those of our existing funds, which could adversely affect our revenues.”
Capital Invested in and Alongside Our Investment Funds
To further align our interests with those of investors in our investment funds, generally 3% – 5% of all capital
commitments to our funds are made by Carlyle, our senior Carlyle professionals, advisors, and other professionals. Carlyle will
generally commit up to 1% of capital commitments to our Global Private Equity and Global Credit carry funds, although we
may elect to invest additional amounts in funds focused on new investment areas. We also intend to make investments in our
Global Investment Solutions carry funds, our open-end funds, our BDCs and other 1940 Act regulated vehicles, and our CLO
vehicles. In addition, certain qualified Carlyle professionals and other qualified individuals (including certain individuals who
may not be employees of the firm but who have pre-existing business relationships with Carlyle or industry expertise in the
sector in which a particular investment fund may be investing) are permitted, subject to certain restrictions, to invest alongside
the investment funds we sponsor and advise. Fees assessed or profit allocations on such investments by such persons may be
eliminated or substantially reduced.
Minimum general partner capital commitments to our investment funds are determined separately with respect to each
investment fund. We may, from time to time, exercise our right to purchase additional interests in our investment funds that
become available in the ordinary course of their operations. See Part II, Item 7 “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources” for more information regarding our
minimum general partner capital commitments to our funds. Our general partner capital commitments are funded with cash and
not with carried interest or through a management fee waiver program.
Employees
We believe that one of the strengths and principal reasons for our success is the quality and dedication of our people.
As of December 31, 2024, we employed more than 2,300 individuals, including more than 725 investment professionals,
located in 29 offices across four continents.
Our Culture
Our employees around the globe are united by our culture, which is driven by our mission to invest wisely and create
value. We seek to achieve our mission and deliver value to our shareholders and other stakeholders by creating a culture where
employees strive to excel, deliver for the firm, challenge the status quo, and leverage diverse perspectives. In addition, we
encourage our employees to leave their comfort zone and seek out a leading edge while working with passion, creativity, and a
relentless determination to deliver for our shareholders and other stakeholders. We also seek to foster lateral working
relationships across and beyond Carlyle while working as one team to drive long-term value creation. Moreover, we strive to
lead by example in driving and embracing change.
Our People
At Carlyle, our success hinges on leveraging every opportunity to stay competitive in a complex, global investment
landscape and to be responsive to the needs of our clients. We are committed to growing and cultivating our top talent and
creating an environment that fosters and values the varied perspectives, backgrounds, experiences, and geographies of all our
employees and other stakeholders.
Inclusive Leadership. We seek to foster a culture where all of our employees feel that they belong and everyone can
excel. Inclusive leadership is one of our core leadership competencies, and all employees nominated for promotion to Managing
Director and Partner in 2024 were evaluated on their inclusive leadership and management skills. We also facilitate a global
mentorship program designed to foster professional growth by pairing less experienced employees with seasoned mentors.
Leadership Programs. Our tailored leadership development programs focus on strengthening the communication,
decision-making, and strategic thinking skills of our leaders to drive positive change and grow our competitive advantage.
Employee Resource Groups. Our employee resource groups are open to employees globally and are an integral part of
our culture, providing members with opportunities to expand their awareness, share ideas, build connections, and participate in
professional development.
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Community and Industry Engagement. We seek to drive positive change in the communities in which we operate and
invest, including by supporting several organizations around the world that expand opportunity and access to our industry.
Compensation and Benefits
We believe that competitive compensation and incentive programs are critical to hiring and retaining highly qualified
people. We seek to provide a pay and benefits package that is competitive within the local marketplace for our industry to
reward and retain our employees and attract and retain talent. Compensation comprises a base salary for salaried employees and
compensation per hour for hourly employees in connection with satisfying the daily expectations of their roles. Our annual,
discretionary performance-based bonus program is a significant component of our compensation program and rewards
employees based on firm, segment, investment fund, department, and individual performance to directly align our employees
with our financial performance and strategic goals. To further align the interests of our employees with our shareholders and to
cultivate a strong sense of ownership and commitment to our firm, certain employees also are eligible to receive awards of
restricted stock units and/or participate in our other long-term incentive programs. In order to further drive the alignment of the
interests of our personnel with our shareholders and to improve retention of our personnel, a portion of the performance-based
bonuses for 2024 was paid to Carlyle professionals receiving bonuses over a certain threshold in the form of a grant of
restricted stock units that vests in installments over a period of three years. This was a significant expansion of the initial
implementation of the bonus deferral program in 2023, which applied only to certain senior Carlyle professionals. In addition,
in February 2024, we awarded restricted stock units with performance-based vesting conditions to a select number of senior
Carlyle professionals that have the accountability to help us achieve our growth objectives. These units are highly aligned with
our shareholders as they only vest with share price appreciation.
The success of our business is fundamentally connected to the well-being of our people. We are committed to their
health, safety, and wellness and seek to provide benefits that are locally relevant for our global employees. For example, our
U.S. benefits programs include health and welfare benefits (including healthcare, dental benefits, and vision benefits, among
others), retirement offerings (including employer matching contributions, subject to eligibility requirements), an Employee
Assistance Program, family and caregiver-oriented benefits, and commuting benefits, among other benefits. In addition, we
have various time-off policies for eligible employees for sick leave, vacation leave, personal days, paid holidays, and paid
parental leave. We also seek to provide strong benefits programs globally in line with local market practices.
Consistent with our guiding principle that building better businesses means investing responsibly and engaging in the
communities where we work and invest, we encourage our employees to get involved where they live, work, and invest through
our volunteer and wealth sharing programs. In 2024, more than 290 Carlyle employees gave over 490 philanthropic gifts, which
we matched. These gifts supported over 220 nonprofit organizations globally. Carlyle employees also put their time and
expertise to work through volunteer activities across our offices.
Sustainability
As a responsible global organization dedicated to driving value, Carlyle has invested in a framework and the necessary
resources for understanding, monitoring, and managing material environmental, social, and governance (“ESG”) risks and
opportunities across our portfolio. We believe ESG integration provides an additional lens to help us assess and mitigate risks
and identify and capitalize on potential opportunities. Our ESG Policy outlines our approach to ESG integration and our
resourcing, scope, and investment application.
We prioritize governance, reporting, and transparency on material sustainability and ESG-related matters. We publish
an annual ESG report, Task Force on Climate-related Financial Disclosures (TCFD) report, and corporate sustainability
disclosures, which utilize Global Reporting Initiative (GRI) Standards and provide an internationally recognized framework to
communicate sustainability and ESG matters to our various stakeholders.
With respect to our investments, we may track certain ESG key performance indicators (KPIs) that we consider
potentially relevant as drivers of risk mitigation and/or value creation across diverse geographies and assets for our corporate
private equity and natural resources investments, including climate-related metrics.
Carlyle has an internal, dedicated Sustainability team with a breadth of experience to help identify critical ESG matters
in our investment processes, as well as a network of outside experts to support our investment teams to selectively go deeper on
important sustainability and ESG factors and identify potential growth opportunities for a given investment over our projected
investment periods. We believe our approach to sustainability may strengthen corporate strategy, bring new ideas for
operational efficiency, and help unlock financial value for certain portfolio companies.
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Our Board of Directors oversees our firm’s approach to sustainability. The Board receives regular updates on our
sustainability strategy and certain investment implications, and receives information on thematic topics, such as our approach to
climate risk and opportunity. The Nominating and Corporate Governance Committee of the Board, which takes a leadership
role in shaping our corporate governance, including our sustainability strategy, has appointed a member of the Board to serve as
the Sustainability Lead, responsible for oversight of the firm’s work in this area. In addition, Carlyle’s Co-Heads of
Sustainability are directly responsible for our climate strategy, with ultimate oversight from the firm’s Chief Operating Officer.
Global Technology & Solutions
Global Technology & Solutions, which we refer to as GTS, is essential for Carlyle to conduct investment activities,
manage internal administration activities, and connect our global enterprise. As part of our GTS strategy and governance
processes, we develop and routinely refine our technology architecture and solutions to deliver value to our investors. Our
systems, data, network, and infrastructure are monitored and administered by formal controls and risk management processes
that help protect the data and privacy of our employees, investors, and other stakeholders. In addition, our business continuity
plans are designed to allow critical business functions to continue in an orderly manner in the event of a system outage. Our
GTS team works closely with our business segment teams to maintain operational resilience through business continuity
planning and annual IT disaster recovery and incident response plan testing, which collectively support the goal of mitigating
risk were an emergency to occur.
Our Board of Directors oversees our enterprise risk management strategy, including our strategy on cybersecurity
risks, directly and through its committees. In this respect, the Audit Committee of the Board of Directors oversees our risk
management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term
timeframe. Our Information Security Steering Committee (“ISSC”), which is chaired by our Chief Information Security Officer
and composed of senior representatives from our business, compliance, and risk management departments, monitors threats and
prioritizes the initiatives of our information security program. In addition, we seek to educate our employees on how to
safeguard Carlyle’s information assets through security awareness training focused on cyber risks, as well as simulated phishing
exercises that provide insight into the effectiveness of our security training. Employees serve an integral role in protecting
Carlyle’s data and attest to complying with various requirements both during onboarding and on an annual basis. See Item 1C
“Cybersecurity.”
Competition
As a global investment firm, we compete with a broad array of regional and global investment firms, as well as global
banking institutions and other types of financial institutions and markets, for employees, investors, and investment
opportunities. Generally, our competition varies across business lines, geographies, distribution channels, and financial markets.
We believe that our competition for investors is based primarily on investment performance, business relationships, the quality
of services provided to investors, reputation and brand recognition, pricing, market sentiment, and the relative attractiveness of
the particular opportunity in which a particular fund intends to invest. To stay competitive, we believe it also is important to be
able to offer fund investors a customized suite of investment products that enable them to tailor their investments across the
product offerings in our three global business segments. As we continue to target high net worth investors, we also face
competition for these investors from mutual funds and investment firms that have competing retail products. We believe that
competition for investment opportunities varies across business lines, but is generally based on industry expertise and potential
for value-add, pricing, terms, and the structure of a proposed investment and certainty of execution.
We generally compete with sponsors of public and private investment funds across all of our segments. In addition to
these traditional competitors, we increasingly have faced competition from local and regional firms, insurance and reinsurance
companies, sovereign wealth funds, family offices, and agencies and instrumentalities of governments in the various countries
in which we invest. This trend has been especially apparent in emerging markets, where local firms tend to have more
established relationships with the companies in which we are attempting to invest. Large institutional investors and sovereign
wealth funds increasingly have begun to develop their own in-house investment capabilities and may compete against us for
investment opportunities and greater reliance on advisory firms or in-house investment management may reduce fund of funds’
appeal to large institutional investors.
Within our GPE segment, our main competitors for investment opportunities are generally other private equity
sponsors, sovereign wealth funds, and operating companies acting as strategic acquirers, as well as real estate development
companies and other infrastructure investment business. In our Global Credit segment, our main competitors are private credit
strategies, business development companies, distressed debt funds, mezzanine funds, lessors of commercial aircraft,
infrastructure lenders, other CLO issuers, and asset-backed lenders. In our Global Investment Solutions segment, our main
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competitors are other fund of funds managers and/or with advisers that are turning their business models towards discretionary
investment advisory services. As larger sovereign wealth funds and pension funds pursue direct commitments and secondary
transactions, our Global Investment Solutions funds may face increased competition for investments and co-investment
opportunities.
Some of the entities that we compete with are substantially larger and have greater financial, technical, marketing, and
other resources and more personnel than we do. Many of our competitors also have recently raised, or are expected to raise,
significant amounts of capital and many of them have investment objectives similar to ours, which may create additional
competition for investment opportunities and investor capital. Some of these competitors also may have a lower cost of capital
and access to funding sources that are not available to us, which may create competitive disadvantages for us when sourcing
investment opportunities. In addition, some of our competitors may have higher risk tolerances, different risk assessments, or
lower return thresholds, which could allow them to consider a wider range of investments and to bid more aggressively than us
for investments. Strategic buyers also may be able to achieve synergistic cost savings or revenue enhancements with respect to
a targeted portfolio company, which we may not be able to achieve through our own portfolio, and this may provide them with
a competitive advantage in bidding for such investments.
Regulatory and Compliance Matters
United States
Our businesses, as well as the financial services industry generally, are subject to extensive regulation in the United
States and elsewhere. In general, the SEC, Commodity Futures Trading Commission (the “CFTC”), and other regulators around
the globe have in recent years significantly increased their regulatory activities with respect to global investment firms.
Certain of our subsidiaries are registered as investment advisers with the SEC. Registered investment advisers are
subject to the requirements and regulations of the Advisers Act. Such requirements relate to, among other things, fiduciary
duties to advisory clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest,
recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions
between an adviser and advisory clients, and general anti-fraud prohibitions. In addition, our registered investment advisers are
subject to routine periodic and other examinations by the SEC staff. In accordance with our efforts to enhance our compliance
program and in response to recommendations received from the SEC in the course of such examinations, certain additional
policies and procedures have been put into place, but no material changes to our registered investment advisers’ operations have
been made as a result of such examinations. Certain of our investment advisers also are subject to limited SEC disclosure
requirements as “exempt reporting advisers.”
TCG Capital Markets L.L.C. (“TCG Capital Markets”) is Carlyle’s affiliated U.S. broker-dealer entity. TCG Capital
Markets is registered as a broker-dealer with the SEC and in 50 states, the District of Columbia, the Commonwealth of Puerto
Rico, and the Virgin Islands, and is a member of the Financial Industry Regulatory Authority (“FINRA”). In addition, TCG
Capital Markets operates under an international dealer exemption in the Canadian provinces of Alberta, British Columbia,
Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan. TCG Capital
Markets may act as an underwriter, syndicator, or placement agent in securities offerings and TCG Senior Funding L.L.C. may
act as an underwriter, originator, syndicator, or placement agent for loan originations. TCG Capital Markets also conducts U.S.-
based marketing and fundraising activities for our Global Private Equity, Global Credit, and Global Investment Solutions
business lines, and houses our anti-money laundering compliance function.
Registered broker-dealers are subject to routine periodic and other examinations by the staff of FINRA. No material
changes to our broker-dealer operations have been made as a result of such examinations.
Broker-dealers are subject to rules relating to transactions on a particular exchange and/or market, and rules relating to
the internal operations of the firms and their dealings with customers including, but not limited to, the form or organization of
the firm, qualifications of associated persons, officers and directors, net capital and customer protection rules, books and
records, and financial statements and reporting. In particular, as a result of its registered status, TCG Capital Markets is subject
to the SEC’s uniform net capital rule, Rule 15c3-1 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), which specifies both the minimum level of net capital a broker-dealer must maintain relative to the scope of its business
activities and net capital liquidity parameters. The SEC and FINRA require compliance with key financial responsibility rules,
including maintenance of adequate funds to meet expenses and contractual obligations, as well as early warning rules that
compel notice to the regulators via accelerated financial reporting anytime a firm’s capital falls below the minimum required
level. The uniform net capital rule limits the amount of qualifying subordinated debt that is treated as equity to a specific
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percentage under the debt-to-equity ratio test, and further limits the withdrawal of equity capital, which is subject to specific
notice provisions. Moreover, compliance with net capital rules may limit a firm’s ability to expand its operations, particularly to
those activities that require the use of capital. Violation of the net capital rule may result in censures, fines, the issuance of
cease-and-desist orders, revocation of licenses or registrations, the suspension or expulsion from the securities industry of the
broker-dealer or its officers or employees, or other similar consequences by regulatory bodies. To date, TCG Capital Markets
has not had any capital adequacy issues and is currently capitalized in excess of the minimum maintenance amount required by
regulators.
Carlyle Global Credit Investment Management L.L.C. (“CGCIM”) and CSL III Advisor, LLC, subsidiaries of Carlyle,
serve as investment advisers to certain closed-end investment companies that have elected to be regulated as BDCs under the
Investment Company Act (as well as to certain private funds and other clients). Accordingly, these BDCs are subject to all
relevant provisions under the Investment Company Act as registered investment companies. In addition, CGCIM serves as the
investment adviser to CTAC and CCIF, each of which is regulated as a registered investment company under the Investment
Company Act. Moreover, AlpInvest Private Equity Investment Management, LLC, a subsidiary of Carlyle, serves as the
investment adviser to CAPM, which is regulated as a registered investment company under the Investment Company Act.
CGCIM also serves as a sub-adviser to CAPM.
United Kingdom and the European Union
Similar to the United States, jurisdictions outside the United States in which we operate, in particular Europe, have
become subject to an expanding body of regulation, some of which is complex and prescriptive. Governmental regulators and
other authorities in Europe have proposed or implemented a number of initiatives and additional rules and regulations that could
adversely affect our business. These include rules and regulations in the United Kingdom (“UK”) that are applicable to our
subsidiaries established in the UK, as well as, or in addition to, rules and regulations implemented under European Union
(“EU”) directives or regulations, which generally have application throughout the European Economic Area (“EEA”) but may
also have substantive differences among EU countries as they are implemented pursuant to each member state’s legislative
process.
In the UK, the principal legislation regulating financial services is the Financial Services and Markets Act 2000 (the
“FSMA”) and the principal European pieces of legislation affecting the conduct of our business in the EU is implemented under
the Markets in Financial Instruments Directive (“MiFID”) and the Alternative Investment Fund Managers Directive
(“AIFMD”), although there are also a number of other pieces of legislation both in the UK and the EU that affect our business,
such as the General Data Protection Regulation (and its UK equivalent). The FSMA rules and EU laws that have either been
adopted into UK law in connection with the UK’s withdrawal from the EU (e.g., the Markets in Financial Instruments
Regulation) or already implemented in the UK through domestic legislation or regulatory rules prior to such withdrawal (e.g.,
MiFID and AIFMD), comprehensively regulate the provision of most aspects of our asset management and advisory business in
the UK, including sales, research and trading practices, provision of investment advice, corporate finance, dealing, use and
safekeeping of client funds and securities, record keeping, margin practices and procedures, anti-money laundering, periodic
reporting, settlement procedures, securitization, derivative trading, prudential capital requirements, data protection, and interest
rate benchmarks. Legislation not yet in effect and future legislative initiatives will impact our business. See Item 1A “Risk
Factors—Risks Related to Regulation and Litigation—Regulatory initiatives in jurisdictions outside the United States could
adversely affect our business.”
CECP Advisors LLP (“CECP”), one of our subsidiaries in the UK, is authorized under the FSMA and regulated by the
Financial Conduct Authority (the “FCA”). CECP has permission to undertake certain investment advisory and related activities
in the UK—broadly these are advising on, and arranging deals in relation to certain types of, investments. CECP only is
permitted to carry out these activities in relation to eligible counterparties and professional clients.
CELF Advisors LLP (“CELF”), another one of our subsidiaries in the UK, also is authorized and regulated by the
FCA, but has permission to undertake a broader range of regulated activities than CECP, namely, arranging deals in
investments, advising on investments, managing investments, dealing in investments as agent, and arranging for the
safeguarding and administration of assets. CELF only is permitted to carry out these activities in relation to eligible
counterparties and professional clients.
In April 2024, the AlpInvest Partners LLP application for authorization was approved by the FCA. AlpInvest Partners
LLP now is authorized and regulated by the FCA with permission to carry on investment advisory and related activities,
including advising on and arranging deals in relation to certain types of investments in relation to eligible counterparties and
professional clients.
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In 2022, we acquired Abingworth LLP (“Abingworth”), which is authorized and regulated by the FCA, with
permissions for establishing, operating, or winding up a collective investment scheme, and managing an unauthorized AIF.
Abingworth only is permitted to carry out these activities in relation to eligible counterparties and professional clients.
Also in 2022, CECP appointed CIC Advisors LLP (“CIC”) as an appointed representative. Under the arrangement,
CECP, as the principal of CIC, has accepted regulatory responsibility for CIC of carrying out the activities of advising on
investments and arranging deals in investments. Under the appointed representative arrangement, CIC only is permitted to carry
out these activities in relation to eligible counterparties and professional clients.
Following the UK’s exit from the EU on January 31, 2020, and the end of the Brexit transition period on December 31,
2020, EEA passporting rights (which previously entitled CECP and CELF to provide certain investment services in or into the
EEA on a cross-border basis and Abingworth to market its funds in the EEA on a cross-border basis) are no longer available to
CECP, CELF, and Abingworth. Certain EEA investor-facing activities previously carried on by those firms have been
reorganized such that they are now performed by different, EEA-established, affiliates under alternative licensing arrangements,
and this may continue to change in the future. These arrangements may subject us to additional regulatory obligations and may
impede our ability to raise capital from EEA investors. The UK and the EU announced, on December 24, 2020, that they have
reached agreement on a Trade and Cooperation Agreement (the “TCA”), which addresses the future relationship between the
parties. The TCA was approved by the UK Parliament on December 30, 2020. The TCA was formally ratified by the European
Parliament and has applied permanently since May 1, 2021. However, the TCA does not substantively address future
cooperation in the financial services sector or reciprocal market access into the EU by UK-based firms under equivalence
arrangements or otherwise. Nevertheless, the implications and operations of the TCA may be subject to change and/or develop
on short notice. In addition, the Temporary Marketing Permission Regime (the “TMPR”) allowed EU AIFMs to continue to
market in the UK those funds that were in existence on December 31, 2020, on broadly the same terms as previously applied.
The TMPR expired on December 31, 2023, though funds registered for marketing under the regime have now been offered
landing slots to register with the UK’s Overseas Fund Regime. Any marketing of a new fund coming into existence after
December 31, 2020, must be under the UK’s national private placement regime or under the UK’s Overseas Fund Regime.
Certain of our European subsidiaries are subject to compliance requirements in connection with AIFMD, which
regulates alternative investment fund managers (“AIFMs”) established in the EEA that manage alternative investment funds
(“AIFs”). In the UK, a retained version of the AIFMD exists. The AIFMD also regulates and imposes regulatory obligations in
respect of the marketing in the EEA by AIFMs (whether established in the EEA or elsewhere) of AIFs (whether established in
the EEA or elsewhere). The AIFMD generally became effective in countries across the EEA in 2014. Currently, Carlyle has
three authorized AIFMs in the EEA: AlpInvest, CIM Europe S.a.r.l. (“CIM Europe”), and Carlyle Real Estate SGR S.p.A. In
the UK, Abingworth is authorized under the UK retained version of AIFMD.
The AIFMD imposes significant regulatory requirements on AIFMs. The AIFMD regulates fund managers by, among
other things, prescribing authorization conditions for an AIFM, restricting the activities that can be undertaken by an AIFM,
prescribing the organizational requirements, operating conditions, and regulatory standards relating to such things as initial
capital, remuneration, conflicts, risk management, leverage, liquidity management, delegation of duties, transparency, and
reporting requirements. The AIFMD has the potential to restrict Carlyle’s fund marketing strategy and places additional
compliance obligations on its authorized AIFMs in the form of, among other things, remuneration policies, capital
requirements, reporting requirements, leverage oversight, and liquidity management.
Authorized AIFMs are entitled to market their AIFs throughout the EEA under a marketing passport. Under the
AIFMD, an AIFM may, in addition to its fund management activity, be authorized to provide certain investment services that
would otherwise require authorization under MiFID. Authorization under the AIFMD is currently available only to EEA fund
managers. AlpInvest obtained authorization as an AIFM from the Authority for Financial Markets in the Netherlands (the
“AFM”) in 2015. AlpInvest also is licensed by the AFM to provide some of the additional investment services that are
otherwise generally reserved to MiFID firms. CIM Europe obtained authorization as an AIFM in Luxembourg from the
Commission de Surveillance du Secteur Financier (“CSSF”) in early 2018. CIM Europe also was licensed by the CSSF in
October 2024 to provide additional MiFID investment services under its license. Carlyle Real Estate SGR S.p.A. registered at
the Bank of Italy’s AIFM register under no.127 in 2017.
The AIFMD allows member states to permit marketing within their member state by non-EEA fund managers (under
what are known as national private placement regimes), provided the local law imposes certain minimum requirements.
Member states may impose more stringent requirements. At present, some EEA states have chosen not to operate a national
private placement regime at all, some EEA states apply the minimum requirements, others require the minimum plus a few
additional requirements (e.g., the appointment of a depository), and some require compliance with substantially all of the
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AIFMD. The UK also operates a national private placement regime under AIFMD, as onshored post-Brexit. Certain of
Carlyle’s funds currently are offered in selected member states of the EEA and UK in accordance with the national private
placement regimes of the relevant jurisdiction.
On March 26, 2024, a directive amending the AIFMD, commonly referred to as “AIFMD II,” was published in the
Official Journal. Most of the changes will come into effect in 2026, subject to some grandfathering periods for certain
requirements. AIFMD II imposes a number of amendments to the AIFMD, including more onerous delegation transparency
requirements, enhanced substance requirements, additional liquidity management provisions for AIFMs to the extent that they
manage open-ended AIFs, and revised regulatory reporting and investor disclosures requirements. It also imposes significant
new requirements relating to the activities of funds that originate loans (which may affect a number of our funds), including
new restrictions on the structure that such funds may take and leverage limits for funds with material loan origination activities.
In addition, AIFMD II introduces new conditions for non-EEA AIFMs, such as certain of our U.S. affiliates, to be able
to make use of the national private placement regimes of EEA states, including a condition that the jurisdiction of neither of the
AIFM and AIF have been identified as non-cooperative third countries for tax purposes nor deemed by the EU not to comply
fully with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and thereby to
ensure an effective exchange of information in tax matters. This gives rise to a risk that certain of our AIFs may not be able to
take advantage of such regimes to raise capital from EEA investors, potentially with little notice. Given the significance of
AIFMD II as well as its potential impact on the European fund industry framework, we continue to consider its potential impact
on our business. Compliance with AIFMD II may, among other things, increase the cost and complexity of raising capital, may
slow the pace of fundraising, limit operations, increase operational costs, and disadvantage our investment funds as bidders for
and potential owners of private companies located in the EEA when compared to non-AIF/AIFM competitors. The changes in
AIFMD II will not be replicated in the UK, but the FCA has indicated that there may be some targeted relaxation of the UK
AIFMD requirements.
In August 2021, Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 (the “Cross-Border Marketing Rules”)
came into force in the European Union. The Cross-Border Marketing Rules were introduced to streamline certain aspects of
marketing investment funds by harmonizing the ability for EU AIFMs to distribute AIFs across the EU, including by
introducing a new regime for “pre-marketing.” These regulations also impose new restrictions and new obligations on fund
managers that are pre-marketing their funds in the European Union. Moreover, some EU member states (but not all) also apply,
or intend to apply, certain of the Cross-Border Marketing Rules to non-EU fund managers (including UK and U.S. fund
managers) in relation to the process of marketing of their funds. Accordingly, our ability to market our funds in the European
Union will vary from country to country notwithstanding this pan-EU regulation.
As outlined above, certain of our European subsidiaries, notably CECP, CELF, and CIC in the United Kingdom, must
comply with the regulatory framework established by MiFID (including as retained in the UK), which regulates the provision
and conduct of investment services and activities throughout the EEA. Certain aspects of MiFID also apply to AlpInvest and
CIM Europe by virtue of their MiFID “top-up” permissions as part of their AIFMD authorizations and to CIM France by virtue
of being a “tied agent” of CIM Europe. MiFID prescribes detailed requirements governing the organization and business
conduct of investment firms, regulated markets, and certain other entities such as credit institutions to the extent they perform
investment services or activities.
The latest iteration of MiFID, Directive 2014/65/EU (“MiFID II”) together with the accompanying Regulation (EU)
No 600/2014 (the “Markets in Financial Instruments Regulation” or “MiFIR”), extended the MiFID requirements in a number
of areas and require investment firms to comply with more prescriptive and onerous obligations in relation to such things as:
costs and charges disclosure, product design and governance, the receipt and payment of inducements, the receipt of and
payment for investment research, suitability and appropriateness assessments, conflicts of interest, record-keeping, best
execution, transaction and trade reporting, remuneration, training and competence, and corporate governance. Failure to comply
with MiFID II and its associated legislative acts could result in sanctions from national regulators, the loss of market access,
and a number of other adverse consequences, which would have a detrimental impact on our business. Although the UK
withdrew from the EU, its rules implementing MiFID continue to have effect and MiFIR has been adopted into UK law (subject
to certain amendments to ensure it operates properly in a UK-specific context) in connection with this withdrawal. The EU has
continued to introduce amendments to MiFID II. For example, in August 2022, EU MiFID firms who are providing financial
advice and portfolio management had to carry out a mandatory assessment of the sustainability preferences of their clients.
Broadly, sustainability preferences address taxonomy alignment, Sustainable Finance Disclosure Regulation (“SFDR”)
sustainable investment alignment, and consideration of principal adverse impacts. EU MiFID firms must take these into account
in the selection process of financial products. Further changes are expected to MiFID II.
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The UK introduced a prudential regulatory framework for UK investment firms (the “Investment Firm Prudential
Regime” or the “IFPR”), which is closely based on an equivalent regulatory framework introduced at the EU-level through the
EU Investment Firm Regulation and Investment Firm Directive (together, “IFR/IFD”). The IFPR took effect from January 1,
2022, and applies to our subsidiaries that are UK investment firms under MiFID II, namely CECP, CELF, and AlpInvest
Partners LLP. Under the IFPR, among other requirements, CECP, CELF, and AlpInvest Partners LLP, are required to maintain
a more onerous policy on remuneration, set an appropriate ratio between the variable and fixed components of total
remuneration, and meet requirements on the structure of variable remuneration. These requirements may make it more difficult
for us to attract and retain staff in certain circumstances. Importantly, the broad discretion for UK firms that used to be available
to disapply certain remuneration rules on the basis of “proportionality” does not apply in relation to IFPR. Under IFPR, CECP,
CELF, and AlpInvest Partners LLP, are each required to also make public disclosures on their websites in relation to their (i)
own funds, own funds requirements, and governance structures, (ii) risk management, and (iii) remuneration, including
quantitative information on remuneration paid to staff. IFPR has resulted in increased regulatory capital and liquidity adequacy
requirements for CECP, in particular, and may continue to increase the costs of doing business and may impede intra-group
capital and cash flows.
In the EU, IFR/IFD took effect from June 26, 2021, and represents a complete overhaul of “prudential” regulation in
the EU and substantially increases regulatory capital requirements for certain investment firms and imposes more onerous
remuneration rules, and revised and extended internal governance, disclosure, reporting, liquidity, and group “prudential”
consolidation requirements, among other things. IFR/IFD affects AlpInvest, one of our subsidiaries, because it is an AIFM in
the Netherlands with top-up permissions to provide investment services. In particular, as AlpInvest’s AUM attributable to
separate accounts regulated by MiFID II increases so will AlpInvest’s regulatory capital and liquidity adequacy requirements,
which may increase the costs of doing business and may impede intra-group capital and cash flows. It is possible that in the
future, CIM Europe also may have to comply with IFR/IFD in relation to its MiFID top-up permissions; however, Luxembourg
does not currently apply the regime to AIFMs with MiFID top-ups.
The UK has introduced an important and substantial regime, the “Consumer Duty,” designed to improve outcomes for
retail investors, which fully began to apply in July 2024 for both funds that still are open to investment and those that have
already held their final close. Although Carlyle entities do not generally deal with consumers in the ordinary sense, the regime
may apply to certain of our funds unless Carlyle can rely on an important exemption from the regime for products with certain
minimum denomination. This exemption has been called into question by the FCA previously but continues to be available to
asset managers of investment funds. If removed, this could make the impact of the Consumer Duty more significant and
widespread and have important implications for Carlyle entities if they are unable to rely on another exemption. We intend to
continue to work closely with external counsel and advisors to monitor any developments.
Other Jurisdictions
Certain of our subsidiaries are subject to registration and compliance with laws and regulations of non-U.S.
governments, their respective agencies, and/or various self-regulatory organizations or exchanges relating to, among other
things, investment advisory services and the marketing of investment products, and any failure to comply with these regulations
could expose us to liability and/or damage our reputation. Certain of our private funds also are required to comply with the
trading and disclosure rules and regulations of non-U.S. securities regulators.
The Organization for Economic Cooperation and Development (the “OECD”) has developed Common Reporting
Standard (“CRS”) rules for the automatic exchange of FATCA-like financial account information amongst OECD
member states. Like FATCA, CRS imposes certain due diligence, documentation, and reporting requirements on various
Carlyle entities. While CRS does not contain a potential withholding requirement, noncompliance could subject Carlyle to
certain reputational harm and potential financial penalties.
Carlyle Hong Kong Equity Management Limited is licensed by the Hong Kong Securities and Futures Commission to
carry on Type 1 (dealing in securities) regulated activity in respect of professional investors.
Carlyle Asia Limited is licensed by the Hong Kong Securities and Futures Commission to carry on Type 1 (dealing in
securities) and Type 4 (advising on securities) regulated activities in respect of professional investors.
AlpInvest Partners Limited is licensed by the Hong Kong Securities and Futures Commission to carry on Type 4
(advising on securities) regulated activity in respect of professional investors.
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Carlyle Mauritius Investment Advisor Limited and Carlyle Mauritius CIS Investment Management Limited are
licensed providers of investment management services in the Republic of Mauritius and are subject to applicable Mauritian
securities laws and the oversight of the Financial Services Commission. Carlyle Mauritius Investment Advisor Limited holds a
“Foreign Institutional Investor” license from the Securities and Exchange Board of India, which entitles this entity to engage in
limited activities in India. Carlyle Mauritius CIS Investment Management Limited holds a “Qualified Foreign Institutional
Investor” license from the China Securities Regulatory Commission, which entitles this entity to invest in certain permitted
financial instruments (including equity) and derivatives traded or listed on exchanges in the People’s Republic of China.
Carlyle Australia Equity Management Pty Limited is licensed by the Australian Securities and Investments
Commission as an Australian financial services licensee and is authorized to carry on a financial services business to provide
advice on and deal in financial products (managed investment schemes and securities) for wholesale clients.
Carlyle Japan Equity Management LLC (“CJEM”) is registered with the Financial Services Agency of Japan to carry
out Type II Financial Instruments Business as a Financial Instruments Business Operator and it is also a member of the Type II
Financial Instruments Firms Association, a self-regulatory organization in Japan. Pursuant to this registration, CJEM is
permitted to perform marketing activities to and private placements for specified investors with respect to interests in a limited
partnership.
Carlyle Japan, LLC (“CJLLC”) is registered with the Financial Services Agency of Japan to carry out Investment
Advisory and Agency Business as a Financial Instruments Business Operator and it is also a member of Japan Investment
Advisers Association, a self-regulatory organization in Japan. Pursuant to this registration, CJLLC is permitted to carry out
investment advisory and agency business as defined by the Financial Instruments and Exchange Act of Japan.
Carlyle MENA Investment Advisors Limited, a company limited by shares in the Dubai Financial Centre, holds a
Category 3C license issued by the Dubai Financial Services Authority and is authorized to arrange credit or deal in investments,
advise on financial products or credit, and manage collective investment funds.
Carlyle MENA Advisors Limited, a company limited by shares in the Abu Dhabi Global Market, is authorized by the
Abu Dhabi Financial Services Regulatory Authority and is authorized to arrange deals in investments, advise on investments or
credit, and manage collective investment funds.
Carlyle Singapore Investment Advisors Pte Limited holds a capital markets license and an exempt financial adviser
status with the Monetary Authority of Singapore to carry on fund management and dealing in regulated capital market products
activities in respect of institutional and accredited investors.
AlpInvest Partners Pte Limited holds a capital markets license with the Monetary Authority of Singapore to carry on
fund management activities in respect of institutional and accredited investors.
Carlyle Real Estate SGR S.p.A. holds an authorization from the Bank of Italy to carry on AIFMD-compliant fund
management and real estate activities. It is registered at the Bank of Italy’s AIFM register under no.127.
Carlyle Investments (Canada) Corporation, formerly Diversified Global Asset Management Corporation, holds an
exempt market dealer license with Ontario Securities Commission to facilitate certain Carlyle fund marketing activities in
Canada.
AlpInvest is registered as a cross-border discretionary investment management company with the Financial
Supervisory Service of South Korea.
Carlyle CLO Management LLC is registered as a cross-border discretionary investment management company with
the Financial Supervisory Service of South Korea.
An investment fund advised by us holds an indirect controlling interest in Fortitude Re and Fortitude International
Reinsurance Ltd. (“Fortitude International Re”), Bermuda companies registered as a Class 4 and Class E insurers. Fortitude Re
and Fortitude International Re are subject to regulation and supervision by the Bermuda Monetary Authority (the “BMA”) and
compliance with all applicable Bermuda law and Bermuda insurance statutes and regulations, including but not limited to the
Insurance Act of 1978 (Bermuda) and the rules and regulations promulgated thereunder (the “Bermuda Insurance Act”). In
addition, as a result of ownership of Fortitude by our investment fund, certain Carlyle affiliates that serve as general partner and
investment advisor to the fund are subject to certain insurance laws and regulations in Bermuda as a “controller” of Fortitude
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Re and Fortitude International Re under the Bermuda Insurance Act. These laws and regulations include certain notice
requirements for any person that has become, or as a result of a disposition ceased to be, a shareholder controller of a registered
insurer, and failure to comply with such requirements is an offense punishable by law.
In addition, we and/or our affiliates and subsidiaries may become subject to additional regulatory demands in the
future to the extent we expand our investment advisory business in existing and new jurisdictions. There are also a number of
pending or recently enacted legislative and regulatory initiatives in the United States and around the world that could
significantly impact our business. See Item 1A “Risk Factors—Risks Related to Regulation and Litigation—Extensive
regulation of our business affects our activities and creates the potential for significant liabilities and penalties, and could result
in additional burdens on our business,” “Financial regulations and changes thereto in the United States could adversely affect
our business and the possibility of increased regulatory focus could result in additional burdens and expenses on our business,”
and “Regulatory initiatives in jurisdictions outside the United States could adversely affect our business.”
Our businesses have operated for many years within a framework that requires our being able to monitor and comply
with a broad range of legal and regulatory developments that affect our activities, and we take our obligation to comply with all
such laws, regulations, and internal policies seriously. Our reputation depends on the integrity and business judgment of our
employees, and we strive to maintain a culture of compliance throughout the firm. We have developed, and adhere to,
compliance policies and procedures such as codes of conduct, compliance systems, education, and communication of
compliance matters. These policies focus on matters such as insider trading, anti-corruption, document retention, conflicts of
interest, anti-money laundering, and other matters. Our legal and compliance team monitors our compliance with all of the legal
and regulatory requirements to which we are subject and manages our compliance policies and procedures. Our legal and
compliance team also monitors the information barriers that we maintain to restrict the flow of confidential information,
including material non-public information, across our business. Our enterprise risk management function analyzes our
operations and investment strategies to identify key risks facing the firm and works closely with the legal and compliance team
to address them. The firm also has an independent and objective Internal Audit department that employs a risk-based audit
approach that focuses on Sarbanes-Oxley compliance, enterprise risk management functions, and other areas of perceived risk
and aims to give management and our Board of Directors reasonable assurance that our risks are well-managed, and controls
are appropriate and effective.
Website, Social Media Disclosure, and Availability of SEC Filings
Our website address is www.carlyle.com. We make available free of charge on our website or provide a link on our
website to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and any
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably
practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the “SEC
Documents” portion of our “Shareholders” page on our website. You also may access the reports and other documents we file
with the SEC at a website maintained by the SEC at www.sec.gov.
We use our website (www.carlyle.com), our corporate Facebook page (www.facebook.com/onecarlyle), our corporate
X account (@OneCarlyle or www.twitter.com/onecarlyle), our corporate Instagram account (@onecarlyle or
www.instagram.com/onecarlyle), our corporate LinkedIn account (www.linkedin.com/company/the-carlyle-group), our
corporate YouTube channel (www.youtube.com/user/onecarlyle), and our corporate WeChat account (ID: gh_3e34f090ec20) as
channels of distribution of material company information. For example, financial and other material information regarding our
company is routinely posted on and accessible at www.carlyle.com. Accordingly, investors should monitor these channels, in
addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may
automatically receive email alerts and other information about Carlyle when you enroll your email address by visiting the
“Email Alerts” section at http://ir.carlyle.com/email-alerts. The contents of our website and social media channels are not,
however, a part of this Annual Report on Form 10-K and are not incorporated by reference herein.
The Carlyle Group Inc. was formed in Delaware as a partnership on July 18, 2011, and converted to a corporation on
January 1, 2020. Our principal executive offices are located at 1001 Pennsylvania Avenue, NW, Washington, D.C. 20004-2505.
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ITEM 1A.RISK FACTORS
Risks Related to Our Company
Adverse economic and market conditions and other events or conditions throughout the world could negatively impact our
business in many ways, including by reducing the value or performance of the investments made by our investment funds
and reducing the ability of our investment funds to raise capital, any of which could materially reduce our revenue,
earnings, and cash flow and adversely affect our financial prospects and condition.
Our business and the businesses of the companies in which we invest are materially affected by conditions in the
global financial markets, and economic conditions or other events throughout the world that are outside of our control,
including, but not limited to, changes in interest rates, availability and cost of credit, inflation rates, availability and cost of
energy, economic uncertainty, slowdown in global growth, changes in laws (including laws relating to taxation and regulations
on the financial industry), disease, pandemics or other severe public health events, trade barriers, tariffs, commodity prices,
currency exchange rates and controls, national and international political circumstances (including government contract
terminations or funding pauses, government agency closures, government shutdowns, wars, terrorist acts, or security
operations), geopolitical tensions and instability, social unrest, supply chain pressures, and the effects of climate change. Over
the last several years, markets have been affected by the COVID-19 pandemic, significant increases in U.S. interest rates,
inflationary pressures, sharp currency moves, heightened geopolitical tensions (including those between the United States and
China, Taiwan and China, Israel and Iran and the Axis of Resistance, and between Ukraine and Russia), the imposition of
export controls, tariffs, and trade barriers, the imposition of economic and political sanctions (upon specific individuals or
companies and country, industry, and sector-wide restrictions), ongoing trade negotiations with major U.S. trading partners, and
changes in U.S. tax regulations. Moreover, our investment funds focused on Asia, and portfolio companies within non-Asia
investment funds with significant operations or connectivity and reliance on Asia companies, and listed securities or debt
instruments of companies or industries, could be impacted by any disruptions to the global supply chain that may result from
escalating tensions, disputes, or potential conflicts in the region surrounding the Taiwan Strait. The resulting actions taken, the
response of the international community, and other factors affecting trade with China or political or economic conditions in
Taiwan could disrupt the manufacture of several business critical products or hardware components, including semiconductors,
which may impact sectors and industries regardless of their business proximity to the Taiwan Strait.
Over the twelve months ending on December 31, 2024, the S&P 500 rose by 23.0%, while the MSCI All Country
World Index (MSCI) increased by 15.0%. This robust full-year performance masks interim volatility. Notably, a shift in
Japanese monetary policy drove a sharp appreciation of the yen. This in turn disrupted long-standing carry trades whose
funding leg rested on Japan’s low rates. The surge in the currency value triggered a selloff in Japanese equity markets. Liquidity
pressures further exacerbated the selloff. For example, on August 5, 2024, the Nikkei 225 fell 12.4%, while the TOPIX fell
12.2%, their largest respective single day declines since 1987. Global equity markets were impacted as well, albeit to a lesser
extent. These series of events highlighted how seemingly innocuous and not wholly unexpected changes in policies or other
market conditions may quickly cascade into more significant movements. Factors that impact global markets, including
inflation, interest rates, trade barriers such as tariffs, regulatory, and political environments, can be unpredictable and investor
sentiment could change quickly in the future, while market volatility could accelerate in the face of negative macro, monetary,
or geopolitical developments. If global markets become unstable, it is possible sellers of assets may readjust their valuations
and attractive investment opportunities may become available. On the other hand, the valuations of certain assets we planned to
sell in the near future could be negatively impacted, as well as the valuations of our portfolio companies and, as a result, our
accrued performance revenues.
Market volatility also could adversely affect our fundraising efforts in several ways. Investors often allocate to
alternative asset classes (including private equity) based on a target percentage of their overall portfolio. If the value of an
investor’s portfolio decreases as a whole, the amount available to allocate to alternative assets (including private equity) could
decline. In addition, investors often evaluate the amount of distributions they have received from existing funds when
considering commitments to new funds. Through the first half of 2024, liquidity shortfalls across all private market asset classes
produced persistent and meaningful negative cash flows—more capital calls than distributions—for 14 consecutive quarters, a
phenomenon not seen on such a scale since the aftermath of the Global Financial Crisis. Cumulatively, across private market
asset classes, contributions have exceeded distributions by nearly $470 billion since 2020. This has restricted investor liquidity,
which in turn has reduced commitments to private capital assets. Investors also may weigh the likely impact of geopolitical
tensions, cross-border regulations, and other factors such as general market volatility and/or a reduction in distributions to
investors when considering their allocations to new investment funds. A decrease in the amount an investor commits to our
funds could have an impact on the ultimate size of our funds and amount of management fees we generate.
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The availability and cost of financing for significant acquisition and disposition transactions could be impacted if
equity and credit markets experience heightened volatility. While base rates are elevated relative to recent historical norms, high
yield credit spreads currently are very favorable and remain near historic lows; at 275 basis points, B-rated spreads sit just 40
basis points above the trough hit in the second quarter of 2007. Obtaining financings in both the high yield and leveraged loan
markets currently is relatively easy. If credit markets weaken in the future, it is possible that we and our investment funds may
not be able to consummate significant acquisition and disposition transactions on acceptable terms, or at all, if we or our funds
are unable to finance these types of transactions on attractive terms or if the counterparty to the transaction is unable to secure
suitable financing.
Global merger and acquisition volume totaled $3.5 trillion in 2024, a 12% increase from 2023. While total M&A
activity appears to be normalizing, a retrenchment could cause a slowdown in our investment pace, which in turn could have an
adverse impact on our ability to generate future performance revenues and to fully invest the available capital in our funds and
reduce opportunities to exit and realize value from our fund investments. A slowdown in the deployment of our available
capital could impact the management fees we earn on those carry funds and managed accounts that generate fees based on
invested (and not committed) capital. A slowdown in the deployment of our available capital also could adversely affect our
ability to raise and the timing of raising successor investment funds. In 2024, we invested nearly $22 billion through our carry
funds.
The current U.S. political environment and the resulting uncertainties regarding actual and potential shifts in U.S.
foreign investment, trade, taxation, economic, environmental, and other policies under the new administration, as well as the
impact of geopolitical tension, such as a deterioration in the bilateral relationship between the United States and China or a
further escalation in conflicts in the Middle East and Eastern Europe, could lead to disruption, instability, and volatility in the
global markets, which also may have an impact on our exit opportunities across negatively impacted sectors or geographies.
The new administration has decided to impose and may decide to impose additional steep tariffs on goods, materials, inputs,
and intermediate parts with origins across numerous geographies. Such changes could materially increase input costs for our
funds’ portfolio companies and depress margins. The new administration also may seek to reduce subsidies and roll back
favorable terms for investments in renewable energy projects, which could adversely impact the performance of those strategies
in our portfolio. The consequences of previously enacted legislation also could impact our business operations in the future. For
example, bipartisan legislation enacted in 2018 has significantly increased and may continue to significantly increase the
number and types of investment transactions that are subject to the jurisdiction of the Committee on Foreign Investment in the
United States (“CFIUS”). Under the final regulations implementing the reform legislation, which became effective in 2020,
CFIUS has the authority to review, and potentially recommend that the President unwind, block, or impose conditions on
certain non-controlling foreign investments in U.S. businesses that deal in certain ways with “critical technology,” “critical
infrastructure,” and/or “sensitive personal data” of U.S. citizens (as those terms are defined in the regulations). In addition, in
September 2022, then-President Biden signed an Executive Order directing CFIUS to sharpen its scrutiny of foreign investment
that could impact cybersecurity, quantum computing, biotechnology, and sensitive data. CFIUS’ expanded jurisdiction may
reduce the number of potential buyers of and investors in U.S. companies and, accordingly, may limit the ability of our funds to
realize value and/or exit from certain existing and future investments. Our flexibility in structuring or financing certain
transactions may likewise be constrained and we are unable to predict whether and to what extent uncertainty surrounding
economic and market conditions or adverse conditions or events in particular sectors may cause our performance to suffer.
During periods of difficult market conditions or slowdowns (which may occur across one or more industries or
geographies), our funds’ portfolio companies may experience adverse operating performance, decreased revenues, financial
losses, credit rating downgrades, difficulty in obtaining access to financing, and increased funding costs. Negative financial
results in our funds’ portfolio companies may result in less appreciation across the portfolio and lower returns in our funds.
Because our investment funds will generally make a limited number of investments, and such investments generally involve a
high degree of risk, negative financial results in a few of an investment fund’s portfolio companies could severely impact the
fund’s total returns. This could materially and adversely affect our ability to raise new funds as well as our operating results and
cash flow. During such periods of weakness, our funds’ portfolio companies also may have difficulty expanding their
businesses and operations or meeting their debt service obligations or other expenses as they become due, including expenses
payable to us. In addition, such negative market conditions could potentially result in a portfolio company entering bankruptcy
proceedings or, in the case of certain real estate funds, the abandonment or foreclosure of investments, thereby potentially
resulting in a complete loss of the fund’s investment in such portfolio company or real assets and a significant negative impact
to the fund’s performance and consequently our operating results and cash flow, as well as to our reputation. Negative market
conditions also could increase the risk of default with respect to investments held by our funds that have significant debt
investments, such as our Global Credit funds. Moreover, as capital markets activity slows, we may experience a corresponding
reduction in the capital markets fees we earn through GCM in connection with activities related to the underwriting, issuance,
and placement of debt and equity securities.
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In addition, during periods of difficult market conditions or slowdowns, the valuations of the investments in our carry
funds could suffer. If we were to realize investments at these lower values, we may not achieve investment returns in excess of
return hurdles required to realize performance revenues or we may become obligated to repay performance revenues previously
received by us. The payment of less or no performance revenues could cause our cash flow from operations to significantly
decrease, which could materially and adversely affect our liquidity position and the amount of cash we have on hand to conduct
our operations and to dividend to our stockholders. The generation of less performance revenues also could impact our leverage
ratios and compliance with our term loan covenants. Having less cash on hand could in turn require us to rely on other sources
of cash (such as the capital markets, which may not be available to us on acceptable terms or at all) to conduct our operations,
which include, for example, funding significant general partner and co-investment commitments to our carry funds. In addition,
during adverse economic and market conditions, we may not be able to renew or refinance all or part of our credit facility or
find alternate financing on commercially reasonable terms. As a result, our uses of cash may exceed our sources of cash,
thereby potentially affecting our liquidity position.
Our use of leverage may expose us to substantial risks.
We periodically use indebtedness as a means to finance our business operations, which exposes us to risks associated
with using leverage. We are dependent on financial institutions extending credit to us on reasonable terms to finance our
business. There is no guarantee that financial institutions will continue to extend credit to us or will renew the existing credit
agreements we have with them on as favorable terms or at all, or that we will be able to refinance our outstanding notes or other
obligations when they mature. In addition, the incurrence of additional debt in the future could result in downgrades of our
existing corporate credit ratings, which could limit the availability of future financing and/or increase our cost of borrowing. As
borrowings under our credit facility or any other indebtedness mature, we may be required to refinance them by entering into a
new facility or issuing additional debt, which could result in higher borrowing costs, or to issue additional equity, which would
dilute existing stockholders. We also could repay them by using cash on hand, cash provided by our continuing operations, or
cash from the sale of our assets, which could reduce dividends to our stockholders. Moreover, we could have difficulty entering
into new facilities or issuing debt or equity securities in the future on attractive terms, or at all.
From time to time, we may access the capital markets by issuing debt securities. For example, in 2021, we issued $500
million aggregate principal amount of 4.625% subordinated notes due May 2061. We also have senior notes with an aggregate
principal amount of $1,375.0 million as of December 31, 2024, as well as a credit agreement that provides a $1.0 billion
revolving facility with a final maturity date of April 29, 2027 (see Note 6, Borrowings, to the consolidated financial statements
in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding our senior and subordinated notes and
credit agreements). The credit agreement contains financial and non-financial covenants with which we need to comply to
maintain access to this source of liquidity. Noncompliance with any of the financial or non-financial covenants without cure or
waiver would constitute an event of default, and an event of default resulting from a breach of certain financial or non-financial
covenants could result, at the option of the lenders, in an acceleration of the principal and interest outstanding, and a termination
of the credit agreement. In addition, to the extent we incur additional debt relative to our current level of earnings or experience
a decrease in our level of earnings, our credit rating could be adversely impacted, which would increase our interest expense
under our credit facility. Standard & Poor’s and Fitch both affirmed our “A-” credit rating with a stable rating outlook in
October 2024.
Our revenue, earnings, net income, and cash flow can all vary materially, which may make it difficult for us to achieve
steady earnings growth on a quarterly basis and may cause the price of our common stock to decline.
Our revenue, earnings, net income, and cash flow can all vary materially due to our reliance on performance revenues.
We may experience fluctuations in our results, including our revenue and net income, from quarter to quarter due to a number
of other factors, including timing of realizations, changes in the valuations of our funds’ investments, changes in the amount of
distributions, dividends, or interest paid in respect of investments, changes in our operating expenses, and the degree to which
we encounter competition, each of which may be impacted by economic and market conditions. Achieving steady growth in net
income and cash flow on a quarterly basis may be difficult, which could in turn lead to large adverse movements or general
increased volatility in the price of our common stock. We generally do not provide guidance regarding our expected quarterly
operating results. The lack of guidance may affect the expectations of public market analysts and could cause increased
volatility in our common stock price.
In addition, our cash flow may fluctuate significantly because we receive performance allocations from our carry funds
only when investments are realized and achieve a certain preferred return. Performance allocations depend on our carry funds’
performance and opportunities for realizing gains, which may be limited. It takes a substantial period of time to realize the cash
value (or other proceeds) of an investment. Even if an investment proves to be profitable, it may be a number of years before
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any profits can be realized, particularly if market conditions were unaccommodating. We cannot predict when, or if, any
realization of investments will occur. The valuations of, and realization opportunities for, investments made by our funds could
also be subject to high volatility as a result of uncertainty or potential changes to governmental policy with respect to, among
other things, tax, trade, immigration, healthcare, labor, infrastructure, and energy.
Prior to our receiving any performance allocations in respect of realization of a profitable investment, 100% of the
proceeds of that investment generally must be paid to the investors in that carry fund until they have recovered certain fees and
expenses and achieved a certain return on all realized investments by that carry fund as well as a recovery of any unrealized
losses. A particular realization event may have a significant impact on our results for that particular quarter that may not be
replicated in subsequent quarters. We recognize revenue on investments in our investment funds based on our allocable share of
realized and unrealized gains (or losses) reported by such investment funds, and a decline in realized or unrealized gains, or an
increase in realized or unrealized losses, would adversely affect our revenue and possibly cash flow, which could further
increase the volatility of our quarterly results. Because our carry funds have preferred return thresholds to investors that need to
be met prior to our receiving any performance allocations, substantial declines in the carrying value of the investment portfolios
of a carry fund can significantly delay or eliminate any performance allocations paid to us in respect of that fund because the
value of the assets in the fund would need to recover to their aggregate cost basis plus the preferred return over time before we
would be entitled to receive any performance allocations from that fund.
The timing and receipt of performance allocations also varies with the life cycle of our carry funds. During periods in
which a relatively large portion of our assets under management is attributable to carry funds and investments in their
“harvesting” period, our carry funds would make larger distributions than in the fundraising or investment periods that precede
harvesting. During periods in which a significant portion of our AUM is attributable to carry funds that are not in their
harvesting periods, we may receive substantially lower performance allocations.
Given our focus on achieving superior investment performance and maintaining and strengthening investor relations, we
may reduce our AUM, restrain its growth, reduce our fees, or otherwise alter the terms under which we do business when we
deem it in the best interest of our investors—even in circumstances where such actions might be contrary to the near-term
interests of our stockholders.
From time to time if we decide it is in the best interests of our stakeholders, we may take actions that could reduce the
profits we could otherwise realize in the short term. While we believe that our commitment to treating our investors fairly is in
the long-term interest of us and our stockholders, our stockholders should understand we may take actions that could adversely
impact our short-term profitability, and there is no guarantee that such actions will benefit us in the long term. The means by
which we seek to achieve superior investment performance in each of our strategies could include limiting the AUM in our
strategies to an amount that we believe can be invested appropriately in accordance with our investment philosophy and current
or anticipated economic and market conditions. In addition, we may seek to exit or end unprofitable or subscale investments,
which may reduce our AUM, including Fee-earning AUM, and/or management fees while generally improving our FRE
margins. We also may voluntarily reduce management fee rates and terms for certain of our funds or strategies when we deem it
appropriate, even when doing so may reduce our short-term revenue. For instance, in order to enhance our relationship with
certain fund investors, we have reduced management fees or ceased charging management fees on certain funds in specific
instances. In certain investment funds, we have agreed to charge management fees based on invested capital or net asset value
as opposed to charging management fees based on committed capital. In certain cases, we have provided “fee holidays” during
which we do not charge management fees for a certain period of time. We also may receive requests to reduce management fees
on other funds in the future. See “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Our
investors may negotiate to pay us lower management fees and the economic terms of our future funds may be less favorable to
us than those of our existing funds, which could adversely affect our revenues.”
Many of our investment funds utilize subscription lines of credit to fund investments prior to the receipt of capital
contributions from the fund’s investors. As capital calls made to a fund’s investors are delayed when using a subscription line
of credit, the investment period of such investor capital is shortened, which may increase the net internal rate of return of an
investment fund. However, because interest expense and other costs of borrowings under subscription lines of credit are an
expense of the investment fund, the investment fund’s net multiple of invested capital will be reduced, as will the amount of
carried interest generated by the fund. Any material reduction in the amount of carried interest generated by a fund will
adversely affect our revenues. See “Risks Related to our Company—Adverse economic and market conditions and other events
or conditions throughout the world could negatively impact our business in many ways, including by reducing the value or
performance of the investments made by our investment funds and reducing the ability of our investment funds to raise capital,
any of which could materially reduce our revenue, earnings, and cash flow and adversely affect our financial prospects and
condition.”
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We also may take other actions, including waiving management fees for a particular investment or fund, that could
adversely impact our short-term results of operations when we deem such action appropriate. Moreover, we typically delay the
realization of carried interest to which we are otherwise entitled if we determine (based on a variety of factors, including the
stage of the fund’s life cycle and the extent of fund profits accrued to date) that there would be an unacceptably high risk of
potential future giveback obligations. Any such delay could result in a deferral of realized carried interest to a subsequent
period. See “Risks Related to Our Company—Our revenue, earnings, net income, and cash flow can all vary materially, which
may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of our common
stock to decline.”
We depend on our senior Carlyle professionals, including our Chief Executive Officer, and the loss of their services or
investor confidence in such personnel could have a material adverse effect on our business, results of operations, and
financial condition.
We depend on the efforts, skill, reputations, and business contacts of our Chief Executive Officer, Harvey M.
Schwartz, our co-founders and other senior Carlyle professionals, the information and deal flow they generate during the
normal course of their activities, and the synergies among the diverse fields of expertise and knowledge held by our
professionals. Accordingly, our success will depend on the continued service of these individuals, who are not obligated to
remain employed with us. Several key personnel have left the firm in the past and others may do so in the future, and we cannot
predict the impact that the departure of any key personnel will have on our ability to achieve our investment objectives. For
example, the governing agreements of many of our funds generally provide investors with the ability to terminate the
investment period in the event that certain “key persons” in the fund do not meet the specified time commitment to the fund or
our firm ceases to control the general partner. The loss of the services of any such persons could have a material adverse effect
on our revenues, net income, and cash flows and could harm our ability to maintain or grow AUM in existing funds or raise
additional funds in the future. Our senior Carlyle professionals possess substantial experience and expertise and have strong
business relationships with our investors and other members of the business community. As a result, the loss of these personnel
could jeopardize our relationships with such parties and result in the reduction of AUM or fewer investment opportunities.
We historically have relied in part on the interests of these professionals in the investment funds’ carried interest and
incentive fees to discourage them from leaving the firm. However, to the extent our investment funds perform poorly, thereby
reducing the potential for carried interest and incentive fees, their interests in carried interest and incentive fees become less
valuable to them and become less effective as incentives for them to continue to be employed by us. We might not be able to
provide future senior Carlyle professionals with interests in our business to the same extent or with the same tax consequences
from which our existing personnel previously benefited. For example, U.S. federal income tax law currently imposes a three-
year holding period requirement for carried interest to be treated as long-term capital gains. The holding period requirement
may result in some of the carried interest received by such individuals being treated as ordinary income, which would
materially increase the amount of taxes that such key personnel would be required to pay. In addition, the tax treatment of
carried interest continues to be an area of focus for policymakers and government officials, which could result in further
regulatory action by federal or state governments. See “Risks Related to Taxation—Changes in relevant tax laws, regulations,
or treaties or an adverse interpretation of these items by tax authorities could negatively impact our effective tax rate, tax
liability, and/or the performance of certain funds should unexpected taxes be assessed to portfolio investments (companies) or
fund income.” Moreover, possible increases in state tax rates or changes to the tax treatment of, or the levying of additional
taxes on, carried interest, along with changing opinions regarding living in some geographies where we have offices, may
adversely affect our ability to recruit, retain, and motivate our current and future professionals.
We strive to maintain a work environment that reinforces our culture where employees strive to excel, deliver for the
firm, challenge the status quo, and leverage diverse perspectives. If we do not continue to develop and implement the right
processes and tools to maintain this culture, our ability to compete successfully and achieve our business objectives could be
impaired, which could negatively impact our business, financial condition, and results of operations.
Recruiting and retaining our professionals has become more difficult and may continue to be difficult in the future, which
could adversely affect our business, results of operations, and financial condition.
Our most important asset is our people, and our continued success is highly dependent upon the efforts of our senior
Carlyle professionals and other employees. Our future success and growth depends to a substantial degree on our ability to
retain and motivate our senior Carlyle professionals and other employees to strategically recruit, retain, and motivate talented
personnel, including senior Carlyle professionals. The market for qualified professionals is extremely competitive across levels
and areas of expertise, and we may not be successful in our efforts to recruit, retain, and motivate these professionals. There
also has been a shift to a hybrid work model and, in our recruiting efforts, we have seen increased focus by prospective
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candidates on remote and hybrid work arrangements and arrangements providing more flexibility, including around location.
Although we generally have moved to a hybrid work model in which many of our employees are permitted to work remotely
for a designated portion of their working time and are expected to come to a Carlyle office for a designated portion of their
working time, we continue to see focus on remote work arrangements. We also have experienced upward pressure on
compensation packages given the increased competition to hire and retain talented personnel, and we may be required to adjust
the amount of cash compensation and types, terms, and amounts of equity incentives we provide to our employees, which could
have positive or negative effects on the financial metrics commonly used to measure our performance. Even when we offer top-
of-market compensation packages, we may not be able to attract and retain all of our desired personnel due to shifting employee
priorities. In addition, the minimum retained ownership requirements and transfer restrictions to which equity incentives are
subject in certain instances lapse over time, may not be enforceable in all cases, and can be waived. There is no guarantee that
the noncompetition and nonsolicitation agreements to which certain of our senior Carlyle professionals are subject, together
with our other arrangements with them, will prevent them from leaving, joining our competitors, or otherwise competing with
us. In addition, there is no assurance that such agreements will be enforceable in all cases. These noncompetition and
nonsolicitation agreements also expire after a certain period of time, at which point such senior Carlyle professionals would be
free to compete against us and solicit our clients and employees. In this respect, in April 2024, the U.S. Federal Trade
Commission (“FTC”) published a final rule that would generally prohibit post-employment noncompete clauses (or other
clauses with comparable effect) in agreements between employers and their employees, subject to limited exceptions, although
enforcement of the final rule has been enjoined. We are continuing to monitor the status of the final rule, including with the new
administration, and the impact it may have on our ability to recruit and retain our professionals.
We have granted and expect to grant equity awards in respect of our shares of common stock. This includes awards
from our Equity Incentive Plan, with respect to which our shareholders approved an additional 19.0 million shares for the
issuance of awards at our 2024 Annual Meeting of Shareholders, and an award of restricted stock units to our Chief Executive
Officer in connection with his hiring, which were granted outside of the Equity Incentive Plan and with respect to which, as of
December 31, 2024, we have granted a total of approximately 7.2 million restricted stock units (including dividend equivalent
units that are credited on such award). The prior and future grants of equity awards in respect of our shares of common stock
have caused and will cause dilution. While we evaluate the grant of equity awards from our Equity Incentive Plan to employees
on an annual basis, the size of the grants, if any, is made at our discretion and may vary significantly from year-to-year,
including as the result of special programs or significant senior personnel hirings. If we increase the use of equity awards from
our Equity Incentive Plan in the future, expenses associated with equity-based compensation may increase materially. In 2024,
we incurred equity compensation expenses of $467.9 million in connection with grants of restricted stock units. In February
2024, we granted a total of 13.2 million restricted stock units to senior Carlyle professionals that are eligible to vest in
installments over a period of three years based on the achievement of absolute stock price targets of 120% (which were satisfied
during the fourth quarter of 2024), 140%, and 160% of the applicable starting share price. In addition, in February 2025, we
granted a total of 4.8 million restricted stock units to Carlyle professionals. Following the foregoing grants, taken together with
other restricted stock unit grants since the initial approval of the Equity Incentive Plan in June 2021, there were 25.7 million
remaining shares of common stock available for grant under the Equity Incentive Plan.
As of December 31, 2024, our employees held an aggregate of 17.2 million unvested restricted stock units, which vest
over various time periods (generally from one year to three-and-a-half years from the date of grant) and/or subject to the
achievement of various performance targets. All of the shares of common stock held by our co-founders are fully vested. In
order to recruit and retain existing and future senior Carlyle professionals and other key personnel, we may need to increase the
level of compensation that we pay to them, which could include grants of significant amounts of restricted stock unit awards or
other equity incentive awards under our Equity Incentive Plan. Accordingly, as we promote or hire new senior Carlyle
professionals and other key personnel over time or attempt to retain the services of certain of our key personnel, we may
increase the level of compensation we pay to these individuals, which could cause our total employee compensation and
benefits expense as a percentage of our total revenue to increase and adversely affect our profitability.
We may expand into new investment strategies, geographic markets, businesses, and types of investors, or seek to expand
our business or change our strategic focus with new strategic initiatives, which may result in additional risks and
uncertainties in our businesses.
Our organizational documents do not limit our ability to enter into new lines of business, and we may expand into new
investment strategies, geographic markets, businesses, types of investors, and investment products. We intend to seek to grow
our businesses by increasing AUM in existing businesses, pursuing new investment strategies (including investment
opportunities in new asset classes), developing new types of investment structures and products (such as publicly listed
vehicles, separately managed accounts, and structured products), expanding into new geographic markets and businesses and
seeking investments from investor bases we have traditionally not pursued, such as individual investors, which subject us to
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additional risk. See also “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—We have
increasingly undertaken business initiatives to increase the number and type of investment products we offer to retail investors,
which could expose us to new and greater levels of risk.” We have opened many offices to conduct our asset management and
capital markets businesses around the world in Europe, the Middle East, and Asia-Pacific, which we intend to grow and expand.
We also have launched a number of new investment initiatives in various asset classes or geographies, and increasingly manage
investment vehicles owned by individual investors, which subject us to additional risk. Introducing new types of investment
structures and products could increase the complexities involved in managing such investments, including ensuring compliance
with applicable regulatory requirements and terms of the investment vehicles.
Our organic growth strategy focuses on providing resources to foster business expansion, such that we achieve a level
of scale and profitability. Given our diverse platform, these initiatives could create conflicts of interests with existing products,
increase our costs, and expose us to new market risks and legal and regulatory requirements. The success of our organic growth
strategy also will depend on, among other things, our ability to correctly identify and create products that appeal to the limited
partners of our funds and vehicles. While we have made significant expenditures to develop these new strategies and products,
there is no assurance that they will achieve a satisfactory level of scale and profitability.
We have pursued and may continue to pursue growth through acquisitions of, or investments in, new businesses, other
investment management companies, acquisitions of critical business partners, strategic partnerships, other alternative or
traditional investment managers, or other strategic initiatives that also may include entering into new lines of business. In
addition, we expect opportunities will arise to acquire other alternative or traditional investment managers. For example, in
August 2022, we acquired Abingworth, a life sciences investment firm, to expand our healthcare investment platform with the
addition of nearly $2 billion in AUM and a specialized team of over 20 investment professionals and advisors. The integration
of Abingworth with us, and Carlyle’s corresponding entry into the life sciences industry, may pose some or all of the risks
noted below. See “Risks Related to Our Business Operations—Industry Risks Related to the Assets We Manage—Our
investments in the life sciences industry may expose us to increased risks.”
To the extent we make strategic investments or acquisitions, undertake other strategic initiatives, expand into new
investment strategies or geographic markets, or enter into a new line of business, we will face numerous risks and uncertainties,
including risks associated with:
•the required investment of capital and other resources;
•delays or failure to complete an acquisition or other transaction in a timely manner or at all, which may
subject us to damages or require us to pay significant costs;
•lawsuits challenging an acquisition or unfavorable judgments in such lawsuits, which may prevent the closing
of the transaction, cause delays, or require us to incur substantial costs, including costs associated with the
indemnification of directors;
•the failure to realize the anticipated benefits from an acquired business or strategic partnership in a timely
manner, if at all;
•combining, integrating, or developing operational and management systems and controls, including an
acquired business’s internal controls and procedures;
•integration of the businesses, including the employees of an acquired business;
•disagreements with joint venture partners or other stakeholders in our strategic partnerships;
•the additional business risks of the acquired business and the broadening of our geographic footprint;
•properly managing conflicts of interests;
•our ability to obtain requisite regulatory approvals and licenses without undue cost or delay and without being
required to comply with material restrictions or material conditions that would be detrimental to us or to the
combined organization;
•our ability to comply with new regulatory regimes; and
•becoming subject to new laws and regulations with which we are not familiar, or from which we are currently
exempt, which may lead to increased litigation and regulatory risk and costs.
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Operational risks (including those associated with our business model), system security risks, breaches of data protection,
cyberattacks, or actions or failure to act by our employees or others with authorized access to our networks, including our
ability to insure against such risks, may disrupt our businesses, result in losses, or limit our growth.
We, our vendors, investors, and other stakeholders rely heavily on financial, accounting, information, and other data
processing systems. Collectively, we face various security threats on a regular basis, including ongoing cybersecurity threats to
and attacks on our information technology infrastructure that are intended to gain access to our proprietary information, destroy
data, or disable, degrade, or sabotage our systems. These security threats originate from a wide variety of sources, including
known or unknown external third parties and current or former employees and contractors who have or had access to our
facilities, systems, and information.
There has been an increase in the frequency and sophistication of the security threats we face, with thwarted attacks
ranging from those common to businesses generally to those that are more advanced and persistent, which may target us
because, as a global investment management firm, we hold a significant amount of confidential and sensitive information about
our investors, our portfolio companies, potential investments, and our employees. More specifically, threat actors have
demonstrated increasing sophistication in their use of social engineering techniques, executive impersonations, and social media
platforms to victimize users and tarnish our brand. Similar issues arise with concentration of services with key service providers
such as cloud storage and email services, which also have experienced occasional minor outages.
Those who have or had authorized access to our networks, including current and former employees and contractors,
may introduce vulnerabilities in our systems by user error or if they are the target of “phishing,” social engineering, bribery,
coercion, or harbor malice toward us. We therefore have implemented a security awareness training program. The objective of
this program is to inform Carlyle personnel and contractors of their responsibility for information security and includes online
training, live awareness events, and phishing simulations. This training is in addition to our existing required onboarding and
annual cybersecurity trainings. In addition, trends to outsource additional work, particularly information technology work,
introduce heightened risks such as improper access management, near-term productivity loss, and threats arising from
contractor machines accessing Carlyle networks.
We cannot know the potential impact of future cyber incidents, which vary widely in severity and scale, potential new
facts or circumstances related to previously detected cyber incidents, or previously undetected cyber incidents. There can be no
assurance that the various procedures and controls we utilize to mitigate these threats will be sufficient to prevent disruptions to
our systems, especially because the cyber-attack techniques used change frequently or are not recognized until launched, and
because cyber-attacks can originate from a wide variety of sources. We do not have controls in place for every possible risk,
and if any of the controls we put in place do not operate properly or are disabled for any reason or if there is any unauthorized
disclosure of data, whether as a result of tampering, a breach of our network security systems, a cyber-incident or attack, or
otherwise, we could suffer substantial financial loss, increased costs, a disruption of our businesses, liability to our funds and
investors, regulatory investigations, intervention and fines, and reputational damage. The costs related to cyber or other security
threats or disruptions may not be fully insured or otherwise indemnified. Significant security incidents at competitor global
investment firms in which we are not directly impacted could indirectly lead to increased costs from investor due diligence,
revisions to insurance premiums, and more extensive and/or frequent regulatory inspections.
Our information systems and technology may not continue to be able to accommodate our growth, and the cost of
maintaining such systems may increase from its current level. For example, our existing systems may not be adequate to
identify or control the relevant risks in investment strategies employed by new investment funds we may introduce. Any failure
to accommodate growth, or an increase in costs related to such information systems, could have a material adverse effect on us.
In addition, we rely on third-party service providers for certain aspects of our business, including for certain information
systems and technology and administration of our business development companies, registered investment companies,
structured credit funds, and Global Investment Solutions segment. For example, Carlyle contracts information system backup
and recovery services to certain companies. These third-party service providers have faced and continue to face ongoing
cybersecurity threats and, as a result, unauthorized individuals could improperly gain access to our confidential data. Any attack
on or interruption or deterioration in the performance of these third parties or failures of their information systems and
technology could also impair the quality of the funds’ operations, affect our reputation, and adversely affect our businesses.
Our technology, data, and intellectual property and the technology, data, and intellectual property of our portfolio
companies also are subject to a heightened risk of theft, disruption, or compromise to the extent we and our portfolio companies
engage in operations outside the United States, particularly in those jurisdictions that do not have comparable levels of
protection of proprietary information and intangible assets, such as intellectual property and customer information and records.
In addition, we and our portfolio companies may be required to compromise protections or forgo rights to technology, data, and
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intellectual property in order to operate in or access markets in a foreign jurisdiction. Any such direct or indirect compromise of
these assets could have a material adverse consequence on us or our investments.
A disaster or a disruption in the infrastructure that supports our businesses, including a disruption involving electronic
communications or other services used by us or third parties with whom we conduct business, or directly affecting our offices,
could have a material adverse impact on our ability to continue to operate our business without interruption. Our disaster
recovery programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption. For example,
systemic risks such as a massive and prolonged global failure of Amazon or Microsoft’s cloud services could result in
cascading catastrophic systems failures. We also may need to commit additional management, operational, and financial
resources to identify new professionals to join our firm and to maintain appropriate operational and financial systems to
adequately support expansion. The market for hiring talented professionals, including IT, AI, privacy, and cybersecurity
professionals, is competitive and we may not be able to grow at the pace we desire.
In addition, we and our portfolio companies may not be able to obtain or maintain sufficient insurance (including cyber
insurance) on commercially reasonable terms or with adequate coverage levels against potential liabilities we may face in
connection with potential claims, which could have a material adverse effect on our business. We may face a risk of loss from a
variety of claims, including related to securities, antitrust, contracts, cyber incidents, fraud, business interruption, and various
other potential claims, whether or not such claims are valid. Insurance and other safeguards may only partially reimburse us for
our losses, if at all, and if a claim is successful and exceeds or is not covered by our insurance policies, we may be required to
pay a substantial amount in respect of such successful claim. Because of market conditions, premiums, and deductibles for
certain insurance policies, particularly directors and officers, cyber, and property insurance, have increased substantially across
the industry and may increase further and, in some instances, certain insurance may become unavailable or available only for
reduced amounts of coverage. Moreover, the dollar amount of claims and/or the number of claims we experience also may
increase at any time, which may have the result of further increasing our costs.
Certain losses of a catastrophic nature, such as wars, systemic risk associated with cyber-kinetic warfare, earthquakes,
floods, typhoons, pandemics (such as COVID-19), terrorist attacks, or other similar events may be uninsurable or may only be
insurable at rates that are so high that maintaining coverage would cause an adverse impact on our business, our investment
funds, and their portfolio companies. In general, losses related to terrorism and catastrophic nation-state hacks are becoming
harder and more expensive to insure against. In this respect, some insurers are excluding coverage of terrorist acts and
catastrophic nation-state hacks from their all-risk policies. In some cases, insurers are offering significantly limited coverage
against terrorist acts for additional premiums, which can greatly increase the total cost of casualty insurance for a property. As a
result, we, our investment funds, and their portfolio companies may not be insured or fully insured against terrorism or certain
other catastrophic losses.
Our portfolio companies also rely on data and processing systems and the secure processing, storage, and transmission
of information including highly sensitive financial, medical, and critical infrastructure data. A disruption or compromise of
these systems, including from a cyber-attack, cyber-incident, or other outage, could have a material adverse effect on the value
of these businesses. Our investment funds may invest in strategic assets having a national or regional profile or in infrastructure
assets, the nature of which could expose them to a greater risk of being subject to a terrorist attack or security breach than other
assets or businesses. Such an event may have adverse consequences on our investment or assets of the same type or may require
portfolio companies to increase preventative security measures or expand insurance coverage.
Failure to maintain the security of our information and technology networks, including personally identifiable information,
intellectual property, and proprietary business information, could have a material adverse effect on us.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business
information and intellectual property, and personally identifiable information of our employees, investors, potential investors,
and others, in our data centers, on our networks, on our cloud environments, and with our third-party service providers. Such
data may be subject to U.S. and foreign data protection and privacy laws and other contractual obligations. The secure
processing, maintenance, and transmission of this information are critical to our operations. Although we take various measures
and have made, and will continue to make, significant investments to ensure the integrity of our systems and to safeguard
against such failures or security breaches, including mechanisms for governance, strategy, and risk management, there can be
no assurance that these measures and investments will provide adequate protection. In this respect, the COVID-19 pandemic
exacerbated these risks due to heavier and continued reliance on online communication and a hybrid work environment that
continues, which may be less secure, and there has been a significant increase in malicious cyber activity involving
ransomware, extortion, and business email compromise. In 2024, Carlyle experienced no material cyber incidents and
39
responded promptly and effectively to routine events, such as user errors, incidental data leakage, phishing campaigns, system
misconfigurations, software failures, and vendor breach notifications, resulting in no material harm to Carlyle.
In addition, we and our employees have been and expect to continue to be the target of fraudulent calls and emails, the
subject of impersonations, and fraudulent requests for money, including attempts to redirect material payment amounts to
fraudulent bank accounts, and other forms of spam attacks, phishing or other social engineering, supply chain attacks,
ransomware, or other events. We also have been, and could in the future be, the target of a type of wire transfer fraud known as
business email compromise where a third party seeks to benefit from misrepresenting an employee or fund investor by
improperly authorizing a wire transfer or change in wire instructions. While our policies and procedures have been largely
effective against this fraud to date, a significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of
investor, employee, or other personally identifiable or proprietary business data, whether by third parties or as a result of
employee malfeasance or otherwise, noncompliance with our contractual or other legal obligations regarding such data or
intellectual property, or a violation of our privacy and security policies with respect to such data could result in significant
remediation and other costs, fines, litigation, or regulatory actions against us by the U.S. federal and state governments, the
European Union, or other jurisdictions, or by various regulatory organizations or exchanges. Such an event also could disrupt
our operations and the services we provide to investors, damage our reputation, result in a loss of a competitive advantage,
impact our ability to provide timely and accurate financial data, and cause a loss of confidence in our services and financial
reporting, which could adversely affect our business, revenues, competitive position, and investor confidence.
Use of artificial intelligence technology by us could lead to the exposure of our data or other adverse effects and increase
competitive, operational, legal, and regulatory risks in ways that we cannot predict.
The use of artificial intelligence and machine learning technologies (collectively, “AI Technologies”), and the overall
adoption of AI Technologies throughout society, create opportunities for us, our funds, investment vehicles and accounts, and
portfolio companies, as well as new and unpredictable competitive, operational, legal, and regulatory risks. We use and plan to
expand our use of AI Technologies in connection with our business and investment activities and selections, and our portfolio
companies and investments also use such technologies. We and our portfolio companies continue to evaluate the rapidly
evolving landscape of AI Technologies. Actual use of AI Technologies varies across our business, funds and portfolio
companies, and investments. While we expect, from time to time, to adopt and adjust usage policies and procedures governing
the use of AI Technologies by our personnel, there is a risk of misuse of such AI Technologies, failure of such AI Technologies
to be available or to perform, or data leakage on account of use of such AI Technologies, any of which could cause a material
harm to us or our portfolio companies. In addition, some of our competitors may be more successful than us in the development
and implementation of new technologies, including services and platforms based on artificial intelligence, to address investor
demands or improve operations. If we are unable to adequately advance our capabilities in these areas, or do so at a slower pace
than others in our industry, we may be at a competitive disadvantage.
In addition, AI Technologies are reliant on the collection and analysis of large amounts of data and complex
algorithms. In this respect, it is not possible or practicable to incorporate all relevant data into models that AI Technologies
utilize to operate. Therefore, it is expected that the data in such models will contain a degree of inaccuracy and error, potentially
to a material degree, and that such data and algorithms could otherwise be inadequate or flawed, which would likely degrade
the effectiveness of AI Technologies and could adversely impact us and our portfolio companies and investments to the extent
we or they rely on the work product of such AI Technologies. We expect to be involved in the collection of such data only in
the context of limited custom development of tools supporting bespoke AI product developments, but these tools are likely to
contain and produce inaccurate information from time to time that will be difficult to identify and mitigate.
The volume and reliance on data and algorithms also make AI Technologies, and in turn us and our portfolio
companies and investments, more susceptible to cybersecurity threats, including data poisoning and the compromise of
underlying models, training data, or other intellectual property. We and our portfolio companies and investments could be
exposed to risks to the extent third-party service providers, or any counterparties use AI Technologies in their business
activities. In this respect, we are not able to control the way third-party products are developed or maintained or the way third-
party services utilizing AI Technologies are provided to us. In addition, AI Technologies may be competitive with the business
of our portfolio companies or increase the potential for obsolescence of a portfolio company’s products or services (particularly
as the capabilities of AI Technologies improve) and, accordingly, the increased adoption and use of AI Technologies may have
an adverse effect on our portfolio companies or their respective businesses. See “Risks Related to Our Company—Operational
risks (including those associated with our business model), system security risks, breaches of data protection, cyberattacks, or
actions or failure to act by our employees or others with authorized access to our networks, including our ability to insure
against such risks, may disrupt our businesses, result in losses, or limit our growth.”
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Moreover, use of AI Technologies may include the input of sensitive personal information, trade secrets, and other
protected data by both us and third parties and could result in the exposure of such information, for example, by becoming part
of a dataset that is generally accessible by AI Technologies applications and users. AI Technologies and their current and
potential future applications, including in the private investment and financial sectors, continue to rapidly evolve, and our use of
AI Technologies may require compliance with legal or regulatory frameworks that are not fully developed or tested and which
may subject us to litigation and regulatory actions. For example, the EU has enacted the AI Act and various other jurisdictions
have proposed or finalized laws that create regulatory risk around the use of AI Technologies or threaten to limit or eliminate
our ability to use AI Technologies. It is impossible to predict the full extent of current or future risks related thereto.
Risks Related to Regulation and Litigation
Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security worldwide may
limit the use and adoption of our services and adversely affect our business.
Legislators and regulators around the world identify data security and privacy as top priorities. As a result, we are
subject to an increasing variety of federal, state, local, and international laws, directives, and regulations, as well as contractual
obligations, relating to the collection, use, retention, security, disclosure, transfer, and other processing of personal information
and other confidential data. The global legal frameworks for privacy, data protection, and data transfers are rapidly evolving
and are likely to remain uncertain for the foreseeable future. Certain of our activities may be subject to the General Data
Protection Regulation (“GDPR”), U.S. state privacy laws, the Cayman Islands Data Protection Act (“DPA”), the UK Data
Protection Act (“UK GDPR”), the Personal Information Protection Law (the “PIPL”), and other existing and developing laws
and regulations.
For example, in March 2022, the SEC issued a proposed rule, which was finalized in July 2023, requiring public
companies to report material cybersecurity incidents on Form 8-K and mandate disclosure of cybersecurity risk management,
strategy, and governance. In light of these proposed and final rules and the focus of federal regulators on cybersecurity
generally in recent years, we expect continued and increasing SEC enforcement activity related to cybersecurity matters,
including by the SEC’s Office of Compliance Inspections and Examinations in its examination programs, where cybersecurity
has been prioritized with an emphasis on, among other things, proper configuration of network storage devices, information
security governance, and policies and procedures related to retail trading information security.
Although we maintain cybersecurity controls designed to prevent cyber incidents from occurring, no security is
impenetrable to cyberattacks. It is possible that current and future cyber enforcement activity will target practices that we
believe are compliant, but the SEC deems otherwise. In addition, many jurisdictions in which we operate have other laws and
regulations relating to data privacy, cybersecurity, data transfers, data localization, and protection of personal information. Our
use of AI technologies also could subject us to additional cybersecurity risks as well as regulatory scrutiny. See “Risk Related
to Our Company—Use of artificial intelligence technology by us could lead to the exposure of our data or other adverse effects
and increase competitive, operational, legal, and regulatory risks in ways that we cannot predict.” Any regulatory investigation
into compliance with these laws and regulations would be costly and could lead to significant fines, service interruption, loss of
licensure, and other harms to the Company.
In the European Economic Area (“EEA”), the General Data Protection Regulation (“GDPR”) establishes requirements
applicable to the processing of personal data, affords data protection rights to individuals, and imposes penalties for violations
of each EEA state’s law implementing the GDPR, including those that result in serious data breaches. In addition, Brexit took
effect in January 2020, which has led to the introduction of the UK GDPR and further legislative changes that increased the
burden of processing and transferring personal data of EEA and UK residents. To satisfy these requirements, we may need to
make use of alternative data transfer mechanisms such as standard contractual clauses approved by the European Commission,
or the International Data Transfer Agreement approved by the UK Information Commissioner’s Office (“ICO”). Any future
updates to data transfer rules may require us to expend significant resources to update our contractual arrangements and to
otherwise comply with such obligations. In particular, while the UK GDPR remains materially equivalent to the GDPR at
present, the UK government recently has introduced the draft Data (Use and Access) Bill which, if it becomes law, has the
potential to impact the finding by the European Commission on June 28, 2021 that the UK provides adequate protection for
personal data transferred from the EEA to UK. This would, in turn, increase our compliance burden with respect to the transfer
of personal data between the EEA and UK. We may experience additional costs to comply with these changes, should they take
effect and, more generally, we, our third-party service providers, and our customers face the potential for the ICO and
regulators in the EEA to apply different standards to the transfer of personal data from the UK and EEA to the United States
and other jurisdictions. Moreover, the EEA and the UK are considering or have enacted a variety of other laws and regulations
such as the Digital Operational Resilience Act, or DORA (EEA), Online Safety Act (UK), and the Artificial Intelligence Act
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(EEA), all of which could have a material impact on Carlyle and its portfolio companies’ ability to conduct our businesses. We
cannot predict how these data protection laws or regulations may develop.
China continues to strengthen its protections of personal information and tighten control over cross-border data
transfers with the implementation of the Cybersecurity Law (“CSL”), Data Security Law (the “DSL”), and the Personal
Information Protection Law (the “PIPL”). These laws may affect the business of Carlyle and our portfolio companies in the
following ways. First, Carlyle and our portfolio companies may be subject to these laws when conducting business and
processing personal information or other data in China. Second, these laws may apply extra-territorially to the processing of
personal information and other data originating in China when conducted by Carlyle or our portfolio companies outside of
China. Third, these laws may impose new regulations on cross-border data transfers and transfers to third-party vendors
conducted by Carlyle and our portfolio companies. The PIPL imposes several conditions that limit certain cross-border transfer
of personal information of Chinese residents, while the DSL restricts transfer of “important data” outside of China. The scope
of “important data” remains unclear but may include certain data collected and/or generated by Carlyle and our portfolio
companies in China, in which case these restrictions could harm Carlyle and its portfolio companies that rely on the ability to
freely transfer data outside China. Finally, Carlyle and our portfolio companies may be contractually bound by certain
compliance obligations when dealing with counterparties in China as a result of these laws.
In addition, the National Intelligence Law (“NIL”), coupled with the Espionage Act, allows authorities to request
organizations like Carlyle and its portfolio companies to provide necessary support, assistance, and cooperation to the Chinese
government. The NIL codifies broad police power, including the ability for intelligence officials to enter relevant restricted
areas and venues, learn from and question relevant organizations, and collect relevant files, materials, or items, including
electronic information.
The costs of compliance with, and other burdens imposed by, the PIPL, CSL, DSL, and NIL, along with any other
cybersecurity and related laws in China, could have an adverse impact on our business and increase our compliance burden. A
determination by the Chinese government that Carlyle or its portfolio companies have violated one of these laws could result in
a variety of penalties, including fines of up to 5% of global revenues, warnings, disgorgement, suspension of business activities
or licenses, shutting down websites or applications that collect sensitive information, and revocation of business licenses or
relevant permits. Certain penalties also can apply to individual staff members responsible for a violation. The lack of clarity and
regulatory guidance on some issues adds to the compliance risks. Any inability, or perceived inability, to adequately address
privacy and data protection concerns, or comply with Chinese laws, regulations, policies, industry standards, contractual
obligations, or other legal obligations could result in additional cost and liability and could damage our reputation and adversely
affect our business and the business of our portfolio companies.
Many other foreign countries and governmental bodies in jurisdictions where Carlyle and our portfolio companies
conduct business have privacy and data protection laws and regulations that are more restrictive than those in the United States.
For example, the Hong Kong Personal Data (Privacy) Ordinance, the Australian Privacy Act, and the Brazilian Bank Secrecy
Law. Global laws in this area are rapidly increasing in the scope and depth of their requirements, which are often extra-
territorial in nature, and global regulators are seeking to enforce their countries’ laws outside of their borders. In addition, we
frequently have added privacy compliance requirements as a result of our contractual obligations with counterparties. These
legal and contractual obligations heighten our privacy obligations in the ordinary course of conducting our business in the
United States and internationally.
In the United States, federal privacy legislation is being considered by Congress and may lead to significant new
obligations for us and our portfolio companies. In the interim, a number of state laws are being passed, such as the California
Consumer Privacy Act (“CCPA”), which took effect in January 2020. The CCPA provides for enhanced consumer protections
for California residents, a private right of action for certain data breaches that is expected to increase related litigation, and
statutory fines for CCPA violations. In addition, the CCPA requires covered companies to provide certain disclosures to
California residents and provides such residents ways to opt-out of certain sales of personal information.
California voters also approved the California Privacy Rights Act (“CPRA”) in November 2020. Effective starting on
January 1, 2023, the CPRA made significant modifications to the CCPA, including by expanding rights with respect to certain
sensitive personal information and creating a new state agency for enforcing the CCPA. Unless and until a federal privacy law
that preempts state laws is enacted, states will continue to shape the data privacy environment nationally. For example, Virginia
enacted the Virginia Consumer Data Protection Act (the “VCDPA”), effective January 1, 2023, Colorado passed the Colorado
Privacy Rights Act (the “CPA”), effective July 1, 2023, Connecticut passed the Connecticut Data Privacy Act (the “CDPA”),
effective July 1, 2023, and Utah passed the Utah Consumer Privacy Act (the “UCPA”), effective December 31, 2023. Several
other U.S. states enacted privacy laws in 2023 that will take effect in the years to come and many other proposals exist in states
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across the United States that could increase our potential liability, increase our compliance costs, and affect our ability to
process personal information integral to our business. Aspects of these state privacy statutes remain unclear, resulting in further
legal uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional
compliance costs.
Complying with various existing, proposed, or yet to be proposed laws, regulations, amendments to or re-
interpretations of existing laws and regulations, and contractual or other obligations relating to privacy, data protection, data
transfers, data localization, or information security may require us to make changes to our services to enable us or our
customers to meet new legal requirements, incur substantial operational costs, modify our data practices and policies, and
restrict our business operations. Any actual or perceived failure by us to comply with these laws, regulations, or other
obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, costs for remediation, and other
liabilities.
For instance, regulatory investigations or penalties related to data protection failures could lead to negative publicity
and may cause our investors to lose confidence in the effectiveness of our security measures. Any inability, or perceived
inability, to adequately address privacy and data protection concerns, or comply with applicable laws, regulations, policies,
industry standards, contractual obligations, or other legal obligations also could result in additional cost and liability and could
damage our reputation and adversely affect our business.
Extensive regulation of our business affects our activities and creates the potential for significant liabilities and penalties,
and could result in additional burdens on our business.
Our business is subject to extensive regulation, including periodic examinations, inquiries, and investigations, by
governmental agencies and self-regulatory organizations in the jurisdictions in which we operate around the world. These
authorities have regulatory powers dealing with many aspects of financial services, including the authority to grant, and in
specific circumstances to cancel, permissions to carry on particular activities. Many of these regulators, including U.S. and
foreign government agencies and self-regulatory organizations, as well as state securities commissions in the United States, also
are empowered to conduct examinations, inquiries, investigations, and administrative proceedings that can result in fines,
suspensions of personnel, changes in policies, procedures, or disclosure or other sanctions, including censure, the issuance of
cease-and-desist orders, the suspension or expulsion of a broker-dealer or investment adviser from registration or memberships,
or the commencement of a civil or criminal lawsuit against us or our personnel.
In recent years, the financial services industry has been the subject of heightened scrutiny, which is expected to
continue to increase, and the SEC has specifically focused on private equity and the private funds industry. In this respect, the
SEC’s stated examination priorities and published observations from recent examinations have included, among other things,
private equity firms’ collection of fees and allocation of expenses, their marketing and valuation practices, allocation of
investment opportunities, investor side letter terms, consistency of firms’ practices with disclosures, handling of material non-
public information and insider trading, disclosures of investment risk, conflicts of interest, adherence to notice, consent and
other contractual requirements regarding limited partnership advisory committees and compliance policies, and procedures with
respect to conflicts of interest. The SEC’s stated examination priorities also have included investment advisers’ and funds’
compliance with recently adopted rules, including those referenced herein. Statements by SEC staff in 2024 and the SEC’s
enforcement and rulemaking activities reflected a focus on certain of these topics and on bolstering transparency in the private
funds industry, including with respect to fees earned and expenses charged by advisers.
In addition, the SEC has proposed and, in some instances, adopted a number of rules related to private funds and
private fund advisors that impact our business and operations. Many of these rules have faced legal challenges, and the future of
several proposed rules is uncertain given the new administration. For example, on June 5, 2024, the U.S. Court of Appeals for
the Fifth Circuit vacated rules and amendments to existing rules under the Investment Advisers Act of 1940, which were
adopted by the SEC in August 2023 (collectively, the “Private Fund Adviser Rules”). The SEC did not seek reconsideration of
the Fifth Circuit’s June ruling by the July 24, 2024 deadline, and the future of the Private Fund Adviser Rules is in doubt.
Moreover, the SEC (in May 2023) and the SEC and CFTC jointly (in February 2024) adopted changes to Form PF, a
confidential form relating to reporting by private fund advisers and intended to be used by the Financial Stability Oversight
Counsel (“FSOC”) for systemic risk oversight purposes, that expand existing reporting obligations. Such increased obligations
may increase our costs, including if we are required to spend more time, hire additional personnel, or buy new technology to
comply effectively.
The SEC also has proposed several other rules that may impact our operations. For example, an October 2022 SEC
proposal would, if adopted, impose substantial obligations on registered investment advisers to conduct initial due diligence and
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ongoing monitoring of a broad universe of service providers that we may use in our investment advisory business. If adopted,
these new rules could significantly increase compliance burdens and associated regulatory costs and complexity for us and
enhance the risk of regulatory action, which could adversely impact our reputation and our fundraising efforts, including as a
result of regulatory sanctions. Moreover, in February 2023, the SEC proposed extensive amendments to the custody rule for
SEC-registered investment advisers, which would apply to all assets of an advisory client, including real estate and other assets
that generally are not considered securities under the federal securities laws. If adopted, the amendments would require, among
other things, that qualified custodians maintain possession of and control of assets of advisory clients and participate in or
effectuate any changes of such assets’ beneficial ownership. There is a lack of clarity as to whether all assets held by our
advisory clients can be custodied in a manner that satisfies the proposed rule or whether existing qualified custodians will
provide custodial services for such assets at a reasonable cost or at all. If adopted, these amendments could expose our
registered investment advisers to additional regulatory liability, increase compliance costs, and impose limitations on our
investing activities. The future of these proposed rules is in doubt, particularly given the successful legal challenge to the
Private Fund Adviser Rules and new administration.
Moreover, we regularly are subject to requests for information, inquiries, and informal or formal investigations by the
SEC and other regulatory authorities, with which we routinely cooperate, and which have included review of historical practices
that were previously examined. Such investigations previously have and may in the future result in penalties and other
sanctions. SEC actions and initiatives can have an adverse effect on our financial results, including as a result of the imposition
of a sanction, a limitation on our or our personnel’s activities, or changing our historic practices. Even if an investigation or
proceeding did not result in a sanction, or the sanction imposed against us or our personnel by a regulator were small in
monetary amount, the adverse publicity relating to the investigation, proceeding, or imposition of these sanctions could harm
our reputation and cause us to lose existing clients or fail to gain new clients.
Certain states and other regulatory authorities have required investment managers to register as lobbyists, and we have
registered as such in a number of jurisdictions. Other states or municipalities may consider similar legislation or adopt
regulations or procedures with similar effect. These registration requirements impose significant compliance obligations on
registered lobbyists and their employers, which may include annual registration fees, periodic disclosure reports, and internal
recordkeeping.
Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of
increased regulatory focus could result in additional burdens and expenses on our business.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted in 2010, has
imposed significant changes on almost every aspect of the U.S. financial services industry, including aspects of our business.
The Dodd-Frank Act added section 13 to the BHC Act, commonly referred to as the “Volcker Rule,” which (together with its
implementing regulations), among other things, generally prohibits, subject to certain exceptions, any “banking
entity” (generally defined as (i) any insured depository institution, subject to certain exceptions including for a depository
institution that (together with every company that controls it) has $10 billion or less in total consolidated assets and trading
assets and liabilities that are less than 5% of total consolidated assets, (ii) any company that controls such an institution, (iii) a
non-U.S. bank that is treated as a bank holding company for purposes of U.S. banking law, and (iv) any affiliate or subsidiary
of the foregoing entities) from sponsoring, acquiring, or retaining an ownership interest in a fund that is not subject to the
provisions of the 1940 Act in reliance solely upon either Section 3(c)(1) or Section 3(c)(7) of the 1940 Act. The Volcker Rule
also authorizes the imposition of additional capital requirements and certain other quantitative limits on such activities engaged
in by certain nonbank financial companies that have been determined to be systemically important by the Financial Stability
Oversight Council (“FSOC”) and subject to supervision by the Federal Reserve, although such entities are not expressly
prohibited from sponsoring or investing in such funds.
In addition, the Dodd-Frank Act imposes a regulatory structure on the “swaps” market, including requirements for
clearing, exchange trading, capital, margin, reporting, and recordkeeping. The CFTC has finalized many rules applicable to
swap market participants, including business conduct standards for swap dealers, reporting and recordkeeping, mandatory
clearing for certain swaps, exchange trading rules applicable to swaps, initial and variation margin requirements for uncleared
swap transactions, and regulatory requirements for cross-border swap activities. These requirements could reduce market
liquidity and adversely affect our business, including by reducing our ability to enter swaps.
The Dodd-Frank Act also authorizes federal regulatory agencies to review and, in certain cases, prohibit compensation
arrangements at financial institutions that give employees incentives to engage in conduct deemed to encourage inappropriate
risk taking by covered financial institutions. On May 16, 2016, the SEC and other federal regulatory agencies proposed a rule
that would apply requirements on incentive-based compensation arrangements of “covered financial institutions,” including
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certain registered investment advisers and broker-dealers above a specific asset threshold. This rule, if adopted, could limit our
ability to recruit and retain investment professionals and senior management executives. However, the proposed rule remains
pending and may be subject to significant modifications. In addition, as directed under the Dodd-Frank Act, on October 26,
2022, the SEC adopted final rules under which companies listed on the NYSE and Nasdaq are required to adopt “clawback”
policies that mandate recovery by companies of certain incentive-based compensation awarded to current and former executives
in the event of an accounting restatement.
Our investment adviser affiliates and subsidiaries are required to comply with a variety of periodic reporting and
compliance-related obligations under applicable federal and state securities laws (including, without limitation, the obligation of
such investment adviser and other affiliates to make regulatory filings with respect to the funds and their activities under the
Advisers Act (including, without limitation, Form ADV or Form PF)). Relatedly, we may be required to provide certain
information regarding some of the investors in our funds to regulatory agencies and bodies to comply with applicable laws and
regulations, including the U.S. Foreign Corrupt Practices Act, as amended (“FCPA”) and Freedom of Information Act. In light
of the heightened regulatory environment in which we operate and the ever-increasing regulations applicable to private
investment funds and their investment advisors, it has become increasingly expensive and time-consuming for us and the funds
to comply with such regulatory reporting and compliance-related obligations. For example, Form PF requires our investment
advisers report financial and other information regarding the funds and their investment and, in May 2023 and February 2024,
the SEC adopted amendments to Form PF that represent a significant expansion of existing reporting obligations that are
expected to increase the scope and frequency of reporting in connection with the funds and their activities. In addition, in 2023,
the SEC adopted new or amended rules that accelerate the filing deadlines for companies to make filings of beneficial
ownership and expand the scope of instances where such a filing is required, require certain asset managers to file with the SEC
on a monthly basis certain data related to their short sales activity, and require annual reporting of how they voted on say-on-
pay proxy matters. Similarly, Rule 206(4)-1 under the Advisers Act, which became fully effective in late 2022, modified the
advertising rules that SEC-registered investment advisers are subject to, and among other things, enhanced certain disclosure
and substantiation requirements.
The SEC has adopted certain rules and proposed multiple other rules that will impact the business operations and
compliance obligations of Carlyle’s investment advisers and funds, including under the Advisers Act in relation to the
safeguarding of client assets, cybersecurity risk governance, the outsourcing of certain functions to service providers, changes
to the SEC’s privacy rule (which were adopted in May 2024 and will be effective as of December 2025), and the use of
predictive data such as through the use of AI technologies and associated conflicts of interest. See “Risks Related to Regulation
and Litigation—Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security
worldwide may limit the use and adoption of our services and adversely affect our business.” It is unclear whether the SEC will
continue to pursue these rulemakings following the appointment of a new SEC chairperson, and the SEC’s regulatory priorities
under new leadership and under the new administration remain uncertain.
The SEC has proposed numerous, and adopted certain, new and amended rules that would apply to market participants
that Carlyle regularly interacts with, including with respect to broker-dealers’ execution of trades and clearance and settlement
of trades. These rules could affect Carlyle’s business by making it more costly financially or otherwise burdensome for Carlyle
to engage in certain business transactions. The SEC also has adopted or proposed numerous new and amended rules that would
apply to market participants that we regularly interact with as counterparties or to our other business activities, including
broker-dealers’ execution of trades and clearance and settlement of trades. These rules could affect our business by making it
more costly financially or burdensome for us to engage in certain business transactions.
In September 2023, the SEC adopted amendments to its fund names rule to require that funds subject to the Investment
Company Act of 1940 whose names suggest that its investments incorporate one or more ESG factors must adopt a policy to
invest at least 80% of their assets consistently with this policy. The compliance date for this amendment to the names rule is
December 2025.
In August 2024, FinCEN issued a final rule that requires certain investment advisers, including registered investment
adviser, to, among other measures, adopt an anti-money laundering and countering the financing of terrorism (“AML/CFT”)
program and file certain reports, such as suspicious activity reports, with FinCEN and to maintain additional records related to
such activities. The SEC has been delegated responsibility for examining investment advisers’ compliance with these
requirements. The rule, which is set to go into effect in January 2026, will likely impose additional regulatory obligations
related to AML/CFT on us.
As part of a sweep investigation of financial services and investment advisory firms, in October 2022, the Company
received from the SEC a request for information related to the preservation of certain types of electronic business
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communications (e.g., text messages and messages on WhatsApp, WeChat, and similar applications) as part of the Company’s
books and records. On January 13, 2025, the SEC announced a settlement with several of the firms that were part of the sweep
investigation, including the Company. Under the settlement, the Company paid a civil penalty of $8.5 million and agreed to
implement certain limited remedial measures, for failure to maintain and preserve such electronic communications in its books
and records under the Advisers Act. See “Risks Related to Regulation and Litigation—Extensive regulation of our business
affects our activities and creates the potential for significant liabilities and penalties, and could result in additional burdens on
our business.”
Various federal, state and local agencies have in the past and may in the future focus on the role of placement agents,
finders, and other similar service providers in the context of investment by public pension plans and other similar entities,
including investigations and requests for information and, in connection therewith, new and/or proposed rules and regulations in
this arena may increase the possibility that our investment advisers and their affiliates may be exposed to claims and/or actions
that could require an investor to withdraw from a fund. In addition, our investment advisers are subject to Rule 206(4)-5 under
the Advisers Act regarding “pay to play” practices by investment advisers involving campaign contributions and other
payments to government clients and elected officials able to exert influence on such clients. Our broker-dealer entities are
subject to similar regulations promulgated by FINRA. Any failure on our part to comply with these rules (or similar state or
other rules adopted now or in the future) could expose us to significant penalties, loss of fees, and reputational damage.
There has been growing regulatory interest, particularly in the U.S., UK, and EU (which may be looked to as models
in growth markets), in improving transparency around how asset managers and issuers define and measure ESG performance,
in order to allow investors to validate and better understand sustainability claims. We, our affiliates, our funds, and their
portfolio companies may be subject to disclosure laws and regulations related to a range of sustainability matters, including, but
not limited to, greenhouse gas emissions; climate change risks; and human rights matters. Impacts may include those connected
with an entity’s own operations and upstream and downstream value chain, including through its products and services, as well
as through its business relationships (the “Sustainability Disclosure Laws”). Compliance with the Sustainability Disclosure
Laws may require the implementation of or changes to systems and procedures for the collection and processing of relevant
data and related internal and external controls, changes to management and/or operational obligations, and dedication of
substantial time and financial resources. The compliance burden and related costs may increase over time. Failure to comply
with applicable Sustainability Disclosure Laws may lead to investigations and audits, fines, other enforcement action or
liabilities, or reputational damage. For example, the SEC established a Climate and ESG Enforcement Task Force in March
2021 and has brought enforcement actions against a few investment advisers alleging inadequate disclosures and policies and
procedures related to ESG; and while there is still uncertainty as to the SEC’s focus over the next few years, enforcement
activity in this area may continue in the future. At the same time, regulators and other stakeholders have increasingly expressed
or pursued opposing views, legislation, and investment expectations with respect to sustainability and diversity, equity, and
inclusion initiatives, including the enactment or proposal of “anti-ESG” and “anti-DEI” legislation or policies. If our practices
do not meet evolving stakeholders’ expectations and standards, or if we are unable to satisfy all stakeholders, our reputation,
ability to attract or retain employees, financial condition, results of operations, and cash flows could be negatively impacted.
We, together with our affiliates, funds, and their portfolio companies, could become subject to additional regulation and/or risk
of regulatory scrutiny in the future, and we cannot guarantee that our current approach will meet future regulatory requirements,
reporting frameworks, or best practices, increasing the risk of related enforcement. Compliance with new requirements also
may lead to increased management burdens and costs for us.
The current regulatory environment in the United States may be impacted by future legislative developments.
Financial services regulation, including regulations applicable to our business, has increased significantly in recent years, and
may in the future be subject to further enhanced governmental scrutiny and/or increased regulation, including resulting from
changes in U.S. executive administration or Congressional leadership. On January 20, 2025, Donald J. Trump and JD Vance
became President and Vice President of the United States, respectively. The nature, timing, and economic effects of potential
future changes to the current legal and regulatory framework affecting financial institutions under the Trump administration is
highly uncertain. None of Carlyle or its affiliates can predict the ultimate impact of the foregoing on us, our business and
investments, or the private equity industry generally, and any prolonged uncertainty could also have an adverse impact on our
business and funds. Future changes may adversely affect our operating environment and therefore our business, operating costs,
financial condition and results of operations. In addition, an extended federal government shutdown resulting from failing to
pass budget appropriations, adopt continuing funding resolutions, or raise the debt ceiling, and other budgetary decisions
limiting or delaying deferral government spending, may negatively impact U.S. or global economic conditions, including
corporate and consumer spending, and liquidity of capital markets.
It is difficult to determine the full extent of the impact on us of any new laws, regulations, or initiatives that may be
proposed or whether any of the proposals will become law. Any changes in the regulatory framework applicable to our
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business, including the changes described above, may impose additional costs on us, impact our ability to generate revenue,
require the attention of our senior management, or result in limitations on the manner in which we conduct our business. We
also anticipate there may be an increase in regulatory investigations of the trading and other investment activities of private
funds, including our investment funds. Compliance with any new laws or regulations (including recent heightened SEC scrutiny
regarding adviser compliance with advisers’ own internal policies) could make compliance more difficult and expensive, affect
the manner in which we conduct our business, and adversely affect our profitability. Moreover, existing rules and future rule
changes could increase our risk of exposure to additional regulatory scrutiny, litigation, censure, and penalties for
noncompliance or perceived noncompliance, which in turn would be expected to adversely (potentially materially) affect us and
our reputation and to negatively impact our ability to conduct business. This, in turn, may increase the need for broader
insurance coverage by fund managers, including us.
The short-term and long-term impact of the Basel capital standards remains uncertain.
In June 2011, the Basel Committee on Banking Supervision, an international body composed of senior representatives
of bank supervisory authorities and central banks from 27 countries, including the United States, announced the final
framework for a comprehensive set of capital and liquidity standards, commonly referred to as “Basel III,” for internationally
active banking organizations and certain other types of financial institutions. The Basel III standards were revised in 2017 as
part of a package of reforms referred to as “Basel IV” (or more recently, “Basel III Endgame”) by the banking industry. These
standards generally require banks to hold more capital, predominantly in the form of common equity, than under the previous
capital framework, reduce leverage, and improve liquidity standards. U.S. federal banking regulators, including the Federal
Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, have adopted final
regulations to implement these standards for U.S. banking organizations; however, the future of such adoptions is in doubt with
the new administration.
Any continued adoption of these rules could restrict the ability of banks to maintain certain levels or types of capital
market exposures under the present structure of their balance sheets, and cause these entities to raise additional capital in order
to stay active in our marketplaces. As a result, their businesses, results of operations, financial condition, or prospects could be
materially adversely affected, which in turn could have unintended adverse consequences for us, through higher borrowing
costs, reduced access to certain types of credit, and increased costs and difficulty for us or our funds to enter into transactions in
the normal course of our business. Moreover, these increased regulatory responsibilities and increased costs could reduce
trading by a number of market participants, which could in turn adversely impact liquidity and increase volatility in the markets
and expose our funds to greater risks in connection with their trading activities.
Regulatory initiatives in jurisdictions outside the United States could adversely affect our business.
Similar to the environment in the United States, the current environment in jurisdictions outside the United States in
which we operate, in particular the EU and the UK, has become subject to an expanding body of regulation. Governmental
regulators and other authorities in the EU and the UK have proposed or implemented a number of initiatives and additional
rules and regulations that could adversely affect our business.
Prudential regimes for EU and UK investment firms. From June 26, 2021, the Investment Firm Regulation and the
Investment Firm Directive (together, “IFR/IFD”) replaced the prudential framework that applied previously to EU investment
firms. IFR/IFD represents a complete overhaul of “prudential” regulation (i.e., capital adequacy, liquidity adequacy,
governance, remuneration policies and practices, public transparency, and regulatory reporting) in the EU and substantially
increases regulatory capital requirements for certain investment firms and imposes more onerous remuneration rules, and
revised and extended internal governance, disclosure, reporting, liquidity, and group “prudential” consolidation requirements
(among other things). IFR/IFD affects AlpInvest, one of our subsidiaries, because it is an alternative investment fund manager
in the Netherlands with MiFID top-up permissions to provide investment services. It is possible that, in the future, CIM Europe
also may have to comply with IFR/IFD in relation to its MiFID top-up permissions; however, Luxembourg does not currently
apply the regime to AIFMs with MiFID top-ups.
The UK has implemented its own version of IFR/IFD, the Investment Firms Prudential Regime (the “IFPR”), which
took effect from January 1, 2021. The IFPR applies to our subsidiaries that are UK investment firms under the post-Brexit UK-
retained Markets in Financial Instruments Directive (as restated, “MiFID II”), namely CECP, CELF, and subject to FCA
approval, AlpInvest Partners LLP. Under the IFPR, among other requirements, both CECP and CELF and subject to FCA
approval, AlpInvest Partners LLP, are required to maintain a more onerous policy on remuneration, set an appropriate ratio
between the variable and fixed components of total remuneration, and meet requirements on the structure of variable
remuneration. These requirements may make it more difficult for us to attract and retain staff in certain circumstances. IFPR
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also resulted in increased regulatory capital and liquidity adequacy requirements for CECP, in particular, which may continue to
increase the costs of doing business and may impede intra-group capital and cash flows.
AIFMD. The AIFMD was implemented in most jurisdictions in the EEA, on July 22, 2014. The AIFMD regulates
alternative investment fund managers (“AIFMs”) established in the EEA that manage alternative investment funds (“AIFs”).
The AIFMD also regulates and imposes regulatory obligations in respect of the marketing in the EEA by AIFMs (whether
established in the EEA or elsewhere) of AIFs (whether established in the EEA or elsewhere). The UK implemented AIFMD
while it was still a member of the EU and “onshored” it as part of UK law, such that similar requirements continue to apply in
the UK notwithstanding Brexit. Abingworth is authorized in the UK as an AIFM by the FCA. AlpInvest, one of our
subsidiaries, obtained authorization in 2015 and is licensed as an AIFM in the Netherlands. Moreover, in 2017, one of our
subsidiaries, Carlyle Real Estate SGR S.p.A, was registered as an AIFM in Italy and in 2018, one of our subsidiaries, CIM
Europe, obtained authorization as an AIFM in Luxembourg.
In April 2024, AIFMD II was adopted and published in the Official Journal, which means that AIFMD II will apply
from April 2026 onward, subject to grandfathering periods for certain requirements. AIFMD II imposes a number of
amendments to the AIFMD, including more onerous delegation requirements, enhanced substance requirements, additional
liquidity management provisions for AIFMs to the extent that they manage open-ended AIFs, and revised regulatory reporting
and investor disclosures requirements. It also imposes significant new requirements relating to the activities of funds that
originate loans (which may affect a number of our funds), including new restrictions on the structure that such funds may take
and leverage limits for funds with material loan origination activities.
In addition, AIFMD II introduces new conditions for non-EEA AIFMs, such as certain of our U.S. affiliates, to be able
to make use of the national private placement regimes of EEA states, including a condition that the jurisdiction of neither of the
AIFM and AIF have been identified as non-cooperative third countries for tax purposes nor deemed by the EU not to comply
fully with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and thereby to
ensure an effective exchange of information in tax matters. This gives rise to a risk that certain of our AIFs may not be able to
take advantage of such regimes to raise capital from EEA investors, potentially with little notice.
Given the significance of AIFMD II as well as its potential impact on the European fund industry framework, we
continue to consider its potential impact on our business, particularly with regard to our funds that engage in loan origination,
delegation of certain AIFM duties to third-countries that may affect both operating models of CIM Europe and AlpInvest, any
extension of the directive to third country firms, and a push towards harmonization of the Collective Investment in Transferable
Securities (“UCITS”) and AIFMD frameworks. AIFMD II has the potential to limit market access for our non-EU funds.
Moreover, compliance with AIFMD II may, among other things, increase the cost and complexity of raising capital, may slow
the pace of fundraising, limit operations, increase operational costs, and disadvantage our investment funds as bidders for and
potential owners of private companies located in the EEA when compared to non-AIF/AIFM competitors.
CBDF Directive and CBDF Regulation. In August 2021, two main legislative instruments, Directive (EU) 2019/1160
(the “CBDF Directive”) and Regulation (EU) 2019/1156 (the “CBDF Regulation”), came into effect. The CBDF Regulation
and CBDF Directive lay out, among other things, general principles to be adhered to by fund managers when drafting pre-
marketing and marketing communications. The legislative instruments also harmonize the pre-marketing requirements across
the EEA by requiring EU AIFMs to notify their local regulator of their intention to pre-market in certain EEA jurisdictions
within two weeks of pre-marketing having begun. These directives and regulations apply to CIM Europe and AlpInvest.
Solvency II. The European solvency framework and prudential regime for insurers and reinsurers, under the Solvency
II Directive 2009/138/EC (“Solvency II”), took effect in full on January 1, 2016. Solvency II is a regulatory regime that
imposes economic risk-based solvency requirements across all EU member states and consists of three pillars: Pillar I,
quantitative capital requirements, based on a valuation of the entire balance sheet; Pillar II, qualitative regulatory review, which
includes governance, internal controls, enterprise risk management, and supervisory review process; and Pillar III, market
discipline, which is accomplished through reporting of the insurer’s financial condition to regulators and the public. Solvency II
is supplemented by European Commission Delegated Regulation (E.U.) 2015/35 (the “Delegated Regulation”), other European
Commission “delegated acts” and binding technical standards, and guidelines issued by the European Insurance and
Occupational Pensions Authority. The Delegated Regulation sets out detailed requirements for individual insurance and
reinsurance undertakings, as well as for groups, based on the overarching provisions of Solvency II, which together make up the
core of the single prudential rulebook for insurance and reinsurance undertakings in the European Union.
Solvency II sets out stronger capital adequacy and risk management requirements for European insurers and reinsurers
and, in particular, dictates how much capital such firms must hold against their liabilities and introduces a risk-based
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assessment of those liabilities. In addition, Solvency II imposes, among other things, substantially greater quantitative and
qualitative capital requirements for insurers and reinsurers as well as other supervisory and disclosure requirements. While we
are not subject to Solvency II, many of our European insurer or reinsurer fund investors are subject to this directive, as applied
under applicable domestic law. Solvency II also may impact insurers’ and reinsurers’ investment decisions and their asset
allocations. Moreover, insurers and reinsurers will be subject to more onerous data collation and reporting requirements. As a
result, there is potential for Solvency II to have an adverse indirect effect on our businesses by, among other things, restricting
the ability of European insurers and reinsurers to invest in our funds and imposing on us extensive disclosure and reporting
obligations for those insurers and reinsurers that do invest in our funds. A broad review of Solvency II was carried out by the
European Commission in 2020 (the “Solvency II 2020 review”), with input from the European Insurance and Occupational
Pensions Authority (“EIOPA”). This included a related public consultation launched by the European Commission in July
2020. On December 17, 2020, EIOPA submitted its opinion on the Solvency II 2020 review to the European Commission. The
Solvency II 2020 review is expected to result in amendments to various aspects of Solvency II, although the extent of such
amendments is currently unknown. Following this, on September 22, 2021, the European Commission published proposed
legislation to amend the Solvency II Directive. The proposals are subject to the EU ordinary legislative process and are still
being considered by the European Parliament and the European Council, with the implementation date of the revised Solvency
II Directive currently unknown. It is unclear at this stage the extent to which the proposed amendments to Solvency II will have
an indirect effect on our businesses.
Post-Brexit, Solvency II was onshored in the UK. In November 2022, His Majesty’s Treasury (“HM Treasury”) issued
its response to its consultation on a review of Solvency II, outlining the areas of reform that would be delivered through
changes to the UK Prudential Regulation Authority’s (“PRA”) rules and legislation. Two consultation papers have since
followed, the first published on June 29, 2023, and the second on September 28, 2023. The first consultation paper focused on
simplifying the existing framework with the intent of reducing the administrative and reporting requirements (and in turn, costs)
for UK insurance firms. The second consultation paper included proposals to reform insurers’ matching adjustment mechanism,
with the intention of widening the categories of assets that insurers can hold in their portfolios. It is unclear at this stage the
extent to which the proposed amendments to the UK’s version of Solvency II will come into effect or have an indirect impact
on our businesses.
MiFID II. The recast Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation
(collectively referred to as “MiFID II”) came into effect on January 3, 2018. Although the UK has now withdrawn from the EU,
its rules implementing the recast Markets in Financial Instruments Directive continue to have effect and the Markets in
Financial Instruments Regulation has been onshored into UK law (subject to certain amendments to ensure it operates properly
in a UK-specific context) in connection with such withdrawal. MiFID II amended the then-existing MiFID regime and, among
other requirements, introduced new organizational and conduct of business requirements for investment firms in the EEA.
Certain requirements of MiFID II also apply to AIFMs with a MiFID “top-up” permission, such as AlpInvest.
MiFID II extended MiFID requirements in a number of areas such as the receipt and payment of inducements
(including investment research), suitability and appropriateness assessments, conflicts of interest, record-keeping, costs and
charges disclosures, best execution, product design and governance, and transaction and trade reporting. Under MiFID II,
national competent authorities also are required to establish position limits in relation to the maximum size of positions that a
relevant person can hold in certain commodity derivatives. The limits apply to contracts traded on trading venues and their
economically equivalent OTC contracts. The position limits established, as amended from time to time, and our ability to rely
on any exemption thereunder may affect the size and types of investments we may make. Failure to comply with MiFID II and
its associated legislative acts could result in sanctions from national regulators, the loss of market access, and a number of other
adverse consequences that would have a detrimental impact on our business. Certain aspects of MIFID II and Markets in
Financial Instruments Regulations (“MiFIR”) are subject to review and change in both the EU and the UK.
Swiss Marketing Regulations. The Swiss Financial Services Act (FinSA) and the Financial Institution Act (FinIA)
came into force on January 1, 2020, with a transition period that ended on December 31, 2021. FinSA seeks to protect clients of
financial service providers and to establish comparable conditions for the provision of financial services by financial service
providers (FSP), and thus contributes to enhancing the reputation and competitiveness of Switzerland’s financial center. FinIA
introduces coordinated supervision for the various categories of financial institutions: portfolio managers, trustees, managers of
collective assets, fund management companies, and securities firms. The Swiss regulations have an impact on the offering and
marketing foreign investment fund shares into Switzerland on a cross-border basis and creates new requirements for financial
service providers.
Anti-Money Laundering. During 2020, two new EU Anti-Money Laundering (AML) Directives came into force: the
fifth AML EU Directive (AMLD5) and the sixth AML EU Directive (AMLD6). AMLD5 was implemented into UK law on
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January 10, 2020. The changes under AMLD5 include new more stringent customer due diligence measures and requirements
to report discrepancies between information held and the Companies House register and to conduct risk assessments prior to the
launch or use of new products and business practices. AMLD5 has added complexity to our internal processes and any
perceived shortcomings in our adoption of AMLD5 could create reputational risks to our business. AMLD6 harmonizes the
definition of money laundering across the EU, expands the number of offenses that fall under the definition of money
laundering and extends criminal liability to include punishments for legal persons, including partnership entities. On July 20,
2021, the European Commission presented an ambitious package of legislative proposals to strengthen the EU’s anti-money
laundering and countering the financing of terrorism (AML/CFT) rules, including the creation of a new pan-EU supervisory
authority to combat money laundering. The UK government opted out of AMLD6. However, the HM Treasury launched a
consultation on reforming the UK’s AML/CFT regime in June 2023 and is expected to propose some amendments to the
existing regime.
Securitization Regulation. Regulation (EU) 2017/2402 (the “Securitization Regulation”) is a framework for European
securitizations, which came into effect on January 1, 2019. There is a risk that a non-EU AIFM that markets funds in the EU
that invest in securitization positions could be within scope of certain requirements under the Securitization Regulation. To the
extent a non-EU AIFM is within the scope of the Securitization Regulation, it could only hold a securitization exposure where
the originator, sponsor, or original lender retains 5% of the securitization. If our non-EU AIFMs fall within the scope of the
Securitization Regulation, it could affect the asset values of certain of our funds, force divestment of certain assets at depressed
prices, and increase the operating cost of our CLOs. The UK has adopted the Securitization Regulation notwithstanding Brexit.
However, the UK intends to repeal its current implementation and diverge from the EU’s Securitization Regulation. It has
published draft legislation (the “Securitisation Regulations 2023”) as part of a policy statement identifying several areas for
revision in the United Kingdom. The Securitisation Regulations 2023 are still under review and so the final rules remain
unclear, and we continue to monitor industry practice and its implementation.
ESG and Sustainable Finance Regulation. New regulatory initiatives related to ESG and sustainable finance that are or
will be applicable to us, our funds, and their portfolio companies could adversely affect our business. In 2018, the European
Commission adopted an “action plan on financing sustainable growth” (the “Action Plan”). The Action Plan is, among other
things, designed to define and reorient investment towards more sustainable economic activities. The Action Plan contemplates,
among other things, creating an EU green bond standard and establishing EU labels for green financial products, clarifying
asset managers’ and institutional investors’ duties regarding sustainability in their investment decision-making processes,
increasing disclosure requirements in the financial services sector around sustainability, increasing the transparency of
companies on their ESG policies and related processes and management systems, and introducing a “green supporting factor” in
the EU prudential rules for banks and insurance companies to incorporate climate risks and other environmental factors into
banks’ and insurance companies’ risk management policies.
On June 22, 2020, the Official Journal of the European Union published a classification system that establishes a list of
environmentally sustainable economic activities and sets out four overarching conditions that an economic activity has to meet
in order to qualify as environmentally sustainable (Regulation (EU) 2020/852 of the European Parliament and of the Council of
18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU)
2019/2088, “Taxonomy Regulation”). The Taxonomy Regulation, among other things, introduced mandatory disclosure and
reporting requirements and supplements the framework set out in the Sustainable Financial Disclosure Regulation (Regulation
(EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in
the financial services sector, “SFDR”), which requires certain disclosures in relation to whether and, if so, how sustainability
risks and negative impacts on environmental and social factors are taken into account in the investment process and the likely
impacts of sustainability risks on the returns of the financial products. Financial products that have as their objective
“sustainable investment” or that promote binding environmental or social characteristics are required to disclose that objective
or those characteristics in pre-contractual disclosures required pursuant to the AIFMD and report on an ongoing basis their
performance in achieving that objective or those characteristics in periodic reports produced pursuant to the AIFMD. In
addition, if a financial product does not promote environmental or social characteristics or does not have as its objective
“sustainable investment,” the information to be disclosed in accordance with applicable sectoral legislation must also be
followed by a statement indicating that the financial product does not take into account EU criteria for environmentally
sustainable economic activities. The disclosure requirements in the SFDR are supplemented by Commission Delegated
Regulation (EU) 2022/1288 of 6 April 2022, which requires enhanced disclosures in pre-contractual documents, on websites
and in periodic reports. The European Supervisory Authorities published a proposal on December 4, 2023, which amends
certain of the disclosure requirements under SFDR.
In September 2023, the European Commission launched a consultation on SFDR in the form of a questionnaire, the
product of which, including the amended rules, are commonly referred to as “SFDR II.” Compliance with any new
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requirements under SFDR II may lead to increased management burdens and costs, and we cannot guarantee that our current
approach to compliance will meet future regulatory requirements, reporting frameworks, or best practices, which could increase
the risk of related enforcement actions.
Commission Delegated Regulation (EU) 2021/1255 amends Delegated Regulation (EU) 231/2013 to require that
sustainability risks are integrated into the investment decision-making, risk management, and compliance functions and
processes of EU AIFMs. These requirements became effective and have applied to us since August 2022. Commission
Delegated Regulation (EU) 2021/1253, amending Regulation (EU) 2017/565, requires, among other things, certain firms to
carry out a mandatory assessment of the sustainability preferences of clients, integrate sustainability into risk management
policies, and consider sustainability factors in the product approval and governance process, which also became effective and
have applied to us since August 2022.
There is a risk that a significant reorientation in the market following the implementation of these sustainable finance
regulations and further measures could be adverse to our portfolio companies if they are perceived to be less valuable as a
consequence of, among other things, their carbon footprint or allegations or evidence of “greenwashing.” There also is a risk
that market expectations in relation to the SFDR categorization of financial products could adversely affect our ability to raise
capital.
In this respect, sustainable finance initiatives continue to evolve rapidly, and it is not possible at this stage to fully
assess how our business will be affected with certainty. We are monitoring developments in relation to EU sustainable finance
as well as corporate sustainability reporting and proposals for laws requiring due diligence of supply chains. Guidance from EU
policymakers and financial supervisors changes frequently. We, our funds, and their portfolio companies are subject to a risk
that similar measures might be introduced in other jurisdictions in which we or they currently have investments or plan to invest
in the future.
Moreover, on January 5, 2023, the Corporate Sustainability Reporting Directive (“CSRD”) came into force. Broadly,
CSRD amends and strengthens the rules introduced on sustainability reporting for companies, banks, and insurance companies
under the Non-Financial Reporting Directive (2014/95/EU) (“NFRD”). CSRD will require a much broader range of companies
to produce detailed and prescriptive reports on sustainability-related matters within their financial statements, including large
EU companies (including EU subsidiaries of non-EU parent companies), EU and non-EU-companies (including small and
midsize enterprises) with listed securities on EU-regulated markets (except micro-undertakings), and non-EU companies with
significant turnover and a legal presence on EU markets.
The reporting requirements are phased in from 2024, with the first reports including audited information on
sustainability-related matters being published in 2025 to cover the 2024 fiscal year. There still is uncertainty around the specific
requirements of CSRD reporting as the sector-specific reporting standards under CSRD are still due to be published within
delegated acts and only the draft standards are currently available. There can be no assurance that adverse developments with
respect to such risks will not adversely affect assets held by our funds in certain countries or the returns from these assets.
The FCA introduced a regulatory framework that focused on implementing the recommendations of the Financial
Stability Board Taskforce on Climate-related Financial Disclosures (“TCFD”), in particular, by introducing mandatory TCFD-
aligned disclosure requirements for certain FCA authorized firms. These rules are set out in the ESG Sourcebook in the
Business Standards section of the FCA Handbook of Rules and Guidance (“ESG Sourcebook”). The rules capture certain asset
managers including, so far as relevant, certain private fund advisors such as CECP and investment portfolio managers such as
CELF, as well as insurers and FCA-regulated pension providers. There is a phased approach to the implementation of these
rules. For the largest in-scope firms (those with over £50 billion in AUM calculated as a 3-year rolling average), the rules
applied beginning January 1, 2022, with the first public disclosures made by June 30, 2023. For those below this threshold but
above £5 billion in AUM (calculated as a 3-year rolling average), the rules applied beginning January 1, 2023, with disclosures
made by June 30, 2024.
On November 28, 2023, the UK FCA published rules and guidance for sustainability disclosure requirements (“SDR”)
and sustainability labels for investment products (“PS23/16”), which specifies, among other requirements, an anti-greenwashing
rule and sustainability-related disclosure requirements in respect of certain financial products and firms. The new rules have
been added to the ESG Sourcebook and focus on UK managers and UK-managed funds and do not cover overseas managers or
products marketed in the UK. However, the FCA has indicated that it intends to undertake a further consultation on expanding
the scope of these requirements potentially to cover portfolio managers (particularly discretionary wealth management services,
although the scope of the extension is unclear and could be much broader), overseas products, and pension products, which
could capture more substantively our UK advisors and non-UK entities in future. The only rule under SDR that applies to all
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FCA-regulated firms is the new anti-greenwashing rule, which applies when communicating with or approving financial
promotions directed at UK clients from May 31, 2024. This regime diverges from other international sustainability-related
disclosure regimes, including the EU SFDR and the SEC proposals. We are monitoring these developments, particularly how
they may impact our businesses. Additional regulatory costs may be incurred if following an extension, SDR materially applies
to our UK authorized entities and/or funds in future. Such new rules may also have an impact on our fund investment strategies
and financial returns, as a result.
Compliance with sustainable finance frameworks of this nature, including the Taxonomy Regulation, the SFDR, and
CSRD, has and will continue to create an additional compliance burden and increased legal, compliance, governance, reporting,
and other costs to us, our funds, and their portfolio companies because of the need to collect certain information to meet the
disclosure requirements, the need to update or develop new policies and processes to meet regulatory requirements and
associated ESG commitments, claims, and initiatives, and changes to the manner in which we, our funds, or their portfolio
companies conduct business. In addition, where there are uncertainties regarding the operation of sustainable finance
frameworks, a lack of official, conflicting, or inconsistent regulatory guidance, a lack of established market practice, and/or data
gaps or methodological challenges affecting the ability to collect relevant data us and our portfolio companies may be required
to engage third party advisors and/or service providers to fulfill the requirements, thereby exacerbating any increase in
compliance burden and costs.
Appointed Representative Arrangements. Appointed representative arrangements are an area of increased regulatory
focus in the United Kingdom. The FCA has reemphasized the need for principals to take effective responsibility for, and have
appropriate systems in place to adequately supervise, their appointed representatives. CECP is a principal firm that bears
responsibility for CIC. On December 8, 2022, the FCA updated the rules on appointed representatives, which include more
extensive obligations on principal firms, and we have updated our policies and procedures to take account of the amended rules
to ensure CIC and CECP remain compliant.
Leveraged Transactions. In May 2017, the European Central Bank (“ECB”) issued guidance on leveraged
transactions, which applies to significant credit institutions supervised by the ECB in member states of the Eurozone. Under the
guidance, credit institutions should have in place internal policies that include a definition of “leveraged transactions.” Loans or
credit exposures to a borrower should be regarded as leveraged transactions if: (i) the borrower’s post-financing level of
leverage exceeds a total debt to EBITDA ratio of 4.0 times, or (ii) the borrower is owned by one or more “financial sponsors.”
For these purposes, a financial sponsor is an investment firm that undertakes private equity investments in and/or leveraged
buyouts of companies. Following these guidelines, credit institutions in the Eurozone could in the future limit, delay, or restrict
the availability of credit and/or increase the cost of credit for our investment funds or portfolio companies involved in leveraged
transactions. This policy area remains under close scrutiny and further guidance could be issued on short notice in the future.
CSPD. In March 2018, the European Commission published a proposal for a directive governing credit servicers,
credit purchasers, and the recovery of collateral in connection with loans (the “Credit Servicers and Purchasers Directive” or
“CSPD”). The policy aim behind the CSPD is the development of a well-functioning secondary market for non-performing
loans. The CSPD was finalized and published in the Official Journal of the European Union on December 8, 2021, and entered
into force on December 28, 2021. Member states are required to adopt and apply measures implementing the CSPD by
December 30, 2023, and entities carrying on credit servicing activities from December 30, 2023, will be required to obtain
authorization under the CSPD by June 29, 2024.
The CSPD applies to, among others, “credit servicers” and “credit purchasers” and imposes a number of new
requirements relating to licensing, conduct of business, and provision of information. The definition of “credit servicer” in the
Commission proposal is sufficiently broad that it could be construed to include asset managers. The Directive limits the scope
of the requirements for credit servicers and credit purchasers to the servicing or purchasing of credit agreements originally
issued by a credit institution established in the European Union or its subsidiaries established in the European Union. This is
subject, however, to individual member state discretion. Such member states may choose to extend the CSPD requirements to
credit agreements that are not issued by an EU credit institution. Subject to the aforementioned potential extension of scope by
individual member states, the servicing of loans originally advanced by credit funds (rather than, for example, an EU bank) will
fall outside the scope of the CSPD. Asset managers are unlikely to act as principal credit purchasers. However, they may
purchase in-scope credit agreements as agent on behalf of the funds or separately managed accounts for whom they are acting
and therefore may in practice be required to discharge the associated obligations on behalf of underlying clients. Compliance
with these rules could involve a material cost to our business.
Hong Kong Security Law. On June 30, 2020, the National People’s Congress of China passed a national security law
(the “National Security Law”), which criminalizes certain offenses including secession, subversion of the Chinese government,
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terrorism, and collusion with foreign entities. The National Security Law also applies to nonpermanent residents. Although the
extra-territorial reach of the National Security Law remains unclear, there is a risk that the application of the National Security
Law to conduct outside Hong Kong by nonpermanent residents of Hong Kong could limit the activities of or negatively affect
us, our investment funds, and/or portfolio companies. The National Security Law has been condemned by the United States, the
United Kingdom, and several EU countries. The United States and other countries may take action against China, its leaders,
and leaders of Hong Kong, which may include the imposition of sanctions. Escalation of tensions resulting from the National
Security Law, including conflict between China and other countries, protests, and other government measures, as well as other
economic, social, or political unrest in the future, could adversely impact the security and stability of the region and may have a
material adverse effect on countries in which we, our investment funds, and portfolio companies or any of their respective
personnel or assets are located. In addition, any downturn in Hong Kong’s economy could adversely affect our financial
statements and our investments or could have a significant impact on the industries in which we participate, and may adversely
affect our operations, our investment funds, and portfolio companies, including the retention of investment and other key
professionals located in Hong Kong.
Chinese Regulations. In August 2014, the China Securities Regulatory Commission (the “CSRC”), the Chinese
securities regulator, promulgated the Interim Regulations on the Supervision and Administration of Private Investment Funds
(the “CSRC Regulations”). The CSRC Regulations adopt a broad definition of private investment funds, including private
equity funds. In accordance with the CSRC Regulations and other relevant PRC laws, regulations, and authorizations, the
CSRC has become the principal regulator of private equity funds in China. In December 2020, the CSRC further promulgated
Several Provisions on Strengthening the Regulation of Private Investment Funds, pursuant to which the CSRC strengthened its
regulations on private investment funds and private investment fund managers. In July 2023, the State Council of the People’s
Republic of China promulgated the first administrative regulation in the private fund (including private equity and venture
capital funds) sector in China, the Regulations on Supervision and Administration of Private Investment Funds, which took
effect in September 2023 and set out high-level principles and rules regarding major issues in the industry. CSRC has
designated the Asset Management Association of China (the “AMAC”), an industry body, with responsibility to introduce and
promote regulations toward a degree of self-regulation across private equity funds in China. In recent years, regulations,
directives, and guidelines from the AMAC have continued to regulate private investment funds incorporated in China, in
addition to the regulations and directives from the CSRC and the AMAC.
If a private equity fund wishes to accept capital contributions from a PRC governmental body or authority, that fund
also needs to subject itself (including specific conditions regarding the general partner and/or the private investment fund
manager) to the supervision of the National Development and Reform Commission (the “NDRC”). If a private equity fund
wishes to accept capital contributions from a PRC insurance company, that fund also needs to subject itself (including specific
conditions regarding the general partner and/or the private investment fund manager) to the supervision of the China Banking
and Insurance Regulatory Commission (the “CBIRC”). In accordance with the NDRC’s regulations on governmental fund of
funds’ participation in equity investment funds, and/or the CBIRC’s regulations on insurance companies, the private investment
fund is subject to requirements relating to the industry focus, investment scope, investment restrictions, risk control, and
information disclosure. The general partner and/or the private investment fund manager are also subject to additional
restrictions and qualification requirements and are required to fulfill reporting and filing obligations to the NDRC and/or the
CBIRC (in addition to any reporting or filing obligations to the CSRC, the AMAC, local financial bureaus, or others). These
regulations may have an adverse effect on us and/or our renminbi (RMB)-denominated investment funds by, among other
things, increasing the regulatory burden and costs of raising money for RMB-denominated investment funds if we admit
investors that are regulated by the above regulators.
Data Privacy. Many foreign countries and governmental bodies, including the European Union and other relevant
jurisdictions where Carlyle and our portfolio companies conduct business, have laws and regulations concerning the collection
and use of PII and other data obtained from their residents or by businesses operating within their jurisdiction that are more
restrictive than, and could in some cases conflict with, those in the United States. See “Risks Related to Regulation and
Litigation—Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security
worldwide may limit the use and adoption of our services and adversely affect our business” for more information.
Other Similar Measures. Our investment businesses are subject to risk that similar measures might be introduced in
other countries in which our investment funds currently have investments or plan to invest in the future, or that other legislative
or regulatory measures that negatively affect their respective portfolio investments might be promulgated in any of the countries
in which they invest. The reporting related to such initiatives may divert the attention of our personnel and the management
teams of our portfolio companies. Moreover, sensitive business information relating to us or our portfolio companies could be
publicly released. See “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Our funds make
investments in companies that are based outside of the United States, which may expose us to additional risks not typically
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associated with investing in companies that are based in the United States” and Item 1 “Business—Regulatory and Compliance
Matters.”
Laws and regulations on foreign direct investment applicable to us and our funds’ portfolio companies, both within and
outside the United States, may make it more difficult for us to deploy capital in certain jurisdictions or to sell assets to
certain buyers.
Several jurisdictions, including the United States, have restrictions on foreign direct investment pursuant to which their
respective heads of state and/or regulatory bodies have the authority to block or impose conditions with respect to certain
transactions, such as investments, acquisitions, and divestitures, if such transaction threatens to impair national security. In
addition, many jurisdictions restrict foreign investment in assets important to national security by taking steps including, but not
limited to, placing limitations on foreign equity investment, implementing investment screening or approval mechanisms, and
restricting the employment of foreigners as key personnel. These U.S. and foreign laws could limit our funds’ ability to invest
in certain businesses or entities or impose burdensome notification requirements, operational restrictions, or delays in pursuing
and consummating transactions. For example, CFIUS has the authority to review transactions that could result in potential
control of, or certain types of non-controlling investments in, a U.S. business or U.S. real estate by a foreign person. In recent
years, legislation has expanded the scope of CFIUS’ jurisdiction to cover more types of transactions and empower CFIUS to
scrutinize more closely investments in certain transactions. CFIUS may recommend that the President block, unwind, or impose
conditions or terms on such transactions, certain of which may adversely affect the ability of the fund to execute on its
investment strategy with respect to such transaction as well as limit our flexibility in structuring or financing certain
transactions. In addition, CFIUS or any non-U.S. equivalents thereof may seek to impose limitations on one or more such
investments that may prevent us from maintaining or pursuing investment opportunities that we otherwise would have
maintained or pursued, which could make it more difficult for us to deploy capital in certain of our funds.
In August 2023, then-President Biden signed an Executive Order establishing an outbound investment screening
regime intended to regulate or prohibit certain investments by U.S. persons in advanced technology sectors in China and other
jurisdictions that may be designated as a “country of concern.” Pursuant to this regime, on October 28, 2024, the U.S.
Department of the Treasury issued final regulations of the Outbound Investment Security Program, which became effective on
January 2, 2025. The final regulations require notification of (and, in some instances, prohibit) investments by U.S. persons and
U.S.-controlled entities where such investment could provide capital or intangible benefits (e.g., reputational benefits,
managerial assistance, or access to talent networks) and support the development of advanced technologies in, or by persons
associated with, “countries of concern” in the areas of: (i) semiconductors and integrated circuits, (ii) quantum computing,
networking, and communications, and (iii) artificial intelligence. At present, the only “country of concern” is the People’s
Republic of China, including Hong Kong and Macau. In addition, state regulatory agencies may impose restrictions on private
funds’ investments in certain types of assets, which could affect our funds’ ability to find attractive and diversified investments
and to complete such investments in a timely manner.
Our investments outside of the United States also may face delays, limitations, or restrictions as a result of
notifications made under and/or compliance with these legal regimes and rapidly changing agency practices. Other countries
continue to establish and/or strengthen their own national security investment clearance regimes, which could have a
corresponding effect of limiting our ability to make investments in such countries. Heightened scrutiny of foreign direct
investment worldwide also may make it more difficult for us to identify suitable buyers for investments upon exit and may
constrain the universe of exit opportunities for an investment in a portfolio company. As a result of such regimes, we may incur
significant delays and costs, be altogether prohibited from making a particular investment, or impede or restrict syndication or
sale of certain assets to certain buyers, all of which could adversely affect the performance of our funds and, in turn, materially
reduce our revenues and cash flow. Complying with these laws imposes potentially significant costs and complex additional
burdens, and any failure by us or our funds’ portfolio companies to comply with them could expose us to significant penalties,
sanctions, loss of future investment opportunities, additional regulatory scrutiny, and reputational harm.
Increasing scrutiny from stakeholders on sustainability matters, including our ESG reporting, exposes us to reputational
and other risks.
We, our funds, and their portfolio companies face increasing public scrutiny related to sustainability and ESG
activities as well as ESG policies, processes, and/or performance, including from fund investors, stockholders, regulators, and
other stakeholders. We and they risk damage to our brand and reputation, if we or they fail or are perceived to have failed to act
responsibly in several areas, such as environmental stewardship, support for local communities, corporate governance and
transparency, and considering ESG factors in our investment processes. In addition, different stakeholder groups have divergent
views on sustainability and ESG-related matters, including in the countries in which we operate and invest, as well as states and
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localities where we serve public sector clients. This divergence increases the risk that any action or lack thereof with respect to
ESG matters will be perceived negatively by at least some stakeholders and adversely impact our reputation and business. If we
do not successfully manage various sustainability and ESG-related expectations across the varied interests of our stakeholders,
it could erode stakeholder trust, impact our reputation, and constrain our investment opportunities. Adverse incidents with
respect to sustainability and ESG-related activities or policies, processes, and/or performance, including any statements
regarding the investment strategies of our funds or our funds’ ESG efforts or initiatives that are or are perceived to be
inaccurate or misleading, could impact the value of our brand, or the brands of our funds or their portfolio companies, the cost
of our or their operations, and relationships with investors, all of which could adversely affect our business and results of
operations. In particular, there has been significant negative publicity and investor and regulatory focus on the phenomenon of
“greenwashing” (i.e., making inaccurate or misleading statements regarding the sustainability or ESG-related characteristics of
a product, business, or business practice). We could suffer significant reputational damage and regulatory scrutiny if we are
subject to “greenwashing” accusations, including with respect to statements regarding the investment strategies of our funds or
the ESG or sustainability efforts and initiatives by us, our funds, and our portfolio companies. Such accusations also could
result in litigation and adversely impact our ability to raise capital and attract new investors.
Although we consider application of our sustainability strategy to be an opportunity to enhance or protect the
performance of our investments over the long-term, we cannot guarantee that our sustainability strategy, which depends in part
on qualitative judgments, will positively impact the financial or ESG performance of any individual investment or our funds as
a whole. Similarly, to the extent we engage or a third-party sustainability advisor engages with portfolio companies on material
ESG-related practices and potential enhancements thereto, there is no guarantee that such engagements will improve the long-
term value of the investment. Successful engagement efforts on the part of us or a third-party sustainability or ESG advisor will
depend on our or any such third-party advisor’s ability to identify and analyze material sustainability or ESG-related and other
factors and their value, and there can be no assurance that the strategy or techniques employed will be successful. In addition,
our sustainability strategy, including the associated procedures and practices, is expected to change over time.
We and many of our portfolio companies undertake voluntary reporting on various sustainability matters, including,
for example, GHG emissions, supply chain practices, and human capital management. The standards for tracking and reporting
on sustainability matters are relatively new, have not been harmonized, and continue to evolve and we may fail to successfully
implement or comply with these rapidly developing sustainability standards and requirements. Moreover, in conducting ESG
reporting, we may seek to align with particular disclosure frameworks and/or reporting standards, which are evolving. Our
selection of disclosure frameworks and reporting standards may change from time to time and may result in a lack of consistent
or meaningful comparative data from period to period, as well as significant revisions to ESG goals, initiatives, commitments,
or objectives or reported progress in achieving the same. Due to the lack of a single, comprehensive sustainability strategy that
is utilized across all asset managers, we and our portfolio companies may utilize a combination of frameworks or develop
proprietary frameworks where necessary and relevant. In addition, we and our portfolio companies’ selection of reporting
frameworks or standards, and other methodological choices, such as the use of certain performance metrics, levels of
quantification, value chain reporting, or materiality standards, may vary over time and may not always align with evolving
investor and activist expectations or market practices. We and our portfolio companies may suffer reputational damage if our or
their ESG disclosure is viewed as falling short of best practices, or if such reporting indicates ESG performance that does not
meet investor, activist, employee, customer, or other stakeholder expectations. With respect to both voluntary and mandated
ESG disclosures, we and our portfolio companies may not successfully implement measurement processes and disclosure
controls and procedures that meet evolving investor, activist, or regulatory expectations. In addition, enhancements to such
processes and controls may be costly and give rise to significant administrative burdens. For example, collecting, measuring,
and reporting sustainability or ESG-related information and metrics can be costly, difficult, and time consuming, is subject to
evolving reporting standards, and can present numerous operational, reputational, financial, legal, and other risks. If we or our
portfolio companies do not successfully implement controls related to reporting sustainability or ESG-related information, this
could result in legal liability and reputational damage, which could impact our ability to attract and retain investors and
employees.
We are subject to substantial risk of litigation and regulatory proceedings and may face significant liabilities and damage to
our reputation as a result of allegations of improper conduct and negative publicity.
From time to time we, our funds, and our funds’ portfolio companies have been and may be subject to litigation,
including securities class action lawsuits by stockholders, as well as class action lawsuits that challenge our acquisition
transactions and/or attempt to enjoin them. For a discussion of certain legal proceedings to which we are a party, see Note 8,
Commitments and Contingencies, to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-
K. Any private lawsuits or regulatory actions brought against us and resulting in a finding of substantial legal liability could
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materially adversely affect our business, financial condition, or results of operations. In addition, such actions, even if resulting
in a favorable outcome to us, could result in significant reputational harm, which could seriously harm our business.
In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against
the financial services industry in general have been increasing. The investment decisions we make in our asset management
business and the activities of our investment professionals (including in connection with portfolio companies and investment
advisory activities) may subject us, our funds, and our funds’ portfolio companies to the risk of third-party litigation or
regulatory proceedings arising from investor dissatisfaction with the performance of those investment funds, alleged conflicts of
interest, the suitability or manner of distribution of our products, including to retail investors, the activities of our funds’
portfolio companies, and a variety of other claims.
In addition, to the extent investors in our investment funds suffer losses resulting from fraud, gross negligence, willful
misconduct, or other similar misconduct, investors may have remedies against us, our investment funds, our senior managing
directors, or our affiliates under the federal securities law and/or state law. While the general partners and investment advisers
to our investment funds, including their directors, officers, other employees, and affiliates, are generally indemnified to the
fullest extent permitted by law with respect to their conduct in connection with the management of the business and affairs of
our investment funds, such indemnity does not extend to actions determined to have involved fraud, gross negligence, willful
misconduct, or other similar misconduct. The activities of our capital markets services business also may subject us to the risk
of liabilities to our clients and third parties, including our clients’ stockholders, under securities or other laws in connection
with transactions in which we participate. See “Risks Related to Our Business Operations—Risks Related to the Assets We
Manage—Underwriting, syndicating, and securities placement activities expose us to risks.”
We depend to a large extent on our business relationships and our reputation for integrity and high-caliber professional
services to attract and retain investors and to pursue investment opportunities for our funds. As a result, allegations by private
actors, regulators, or employees of improper conduct by us, even if unfounded, as well as negative publicity and press
speculation about us, may harm our reputation. This could adversely impact our relationships with clients and our fundraising.
In recent years, there has been increased activity on the part of certain activist and other organized groups, with respect to
investments made by private funds. Such groups have at times contacted and otherwise sought to engage with government and
regulatory bodies and fund investors, including public pension funds, on our funds’ investments, which has led to negative
publicity that could harm our reputation. The pervasiveness of social media and public focus on the externalities of business
activities could lead to wider dissemination of adverse or inaccurate information about us, making remediation more difficult
and magnifying reputational risk.
Our affiliated subsidiaries serve as the general partners of many of our managed funds and could have liability for certain
fund obligations.
Our affiliated subsidiaries serve as a general partner of many of our funds. As such, under applicable law and the fund
partnership agreements, our subsidiaries could have liability for obligations of our funds if such funds have insufficient assets to
pay such obligations themselves, including contractual obligations, obligations to repay fund indebtedness, uninsured
contingent obligations for litigation damages awards, or taxes determined to be owed by the funds. In general, the funds
indemnify us for such obligations; but if the relevant funds’ assets have been depleted or distributed to fund investors, such
fund may be unable to pay such indemnification obligation to us, and we could suffer significant loss and expense.
Employee misconduct could harm us by impairing our ability to attract and retain clients and subjecting us to significant
legal liability and reputational harm. Fraud, deceptive practices, or other misconduct at portfolio companies or services
providers could similarly subject us to liability and reputational damage and also harm performance.
Our employees could engage in misconduct that adversely affects our business. We are subject to several obligations
and standards arising from our asset management business and our authority over the assets managed by our asset management
business. The violation of these obligations and standards by any of our employees would adversely affect our clients and us.
Our business often requires that we deal with confidential matters of great significance to companies in which we may invest. If
our employees were to improperly use or disclose confidential information, we could suffer serious harm to our reputation,
financial position, and current and future business relationships. Detecting or deterring employee misconduct is not always
possible, and the extensive precautions we take to detect and prevent this activity may not be effective in all cases. In addition, a
prolonged period of remote work, such as the one experienced during the COVID-19 pandemic, may require us to develop and
implement additional precautions in order to detect and prevent employee misconduct. Such additional precautions, which may
include the implementation of security and other restrictions, may make our systems more difficult and costly to operate and
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may not be effective in preventing employee misconduct in a remote work environment. If one of our employees were to
engage in misconduct or were to be accused of such misconduct, our business and our reputation could be adversely affected.
We are subject to U.S. and foreign anti-corruption and anti-bribery laws, including the FCPA, as well as anti-money
laundering laws. The future of the FCPA, however, is uncertain given the new administration’s executive order pausing FCPA
enforcement. In recent years, the United Kingdom has significantly expanded the reach of its anti-bribery laws. While we have
policies and procedures designed to ensure strict compliance by us and our personnel with the FCPA and other applicable laws,
such policies and procedures may not be effective in all instances to prevent violations. Any determination that we have
violated the FCPA, the UK anti-bribery laws, or other applicable anti-corruption, anti-bribery, or anti-money laundering laws
could subject us to, among other things, civil and criminal penalties or material fines, profit disgorgement, injunctions on future
conduct, securities litigation, and a general loss of investor confidence, any one of which could adversely affect our business
prospects, financial position, or the price of our common stock.
Moreover, we also may be adversely affected if there is misconduct by personnel of our funds’ portfolio companies or
by such companies’ service providers. For example, financial fraud or other deceptive practices at our funds’ portfolio
companies, or failures by personnel at our funds’ portfolio companies to comply with anti-corruption, anti-bribery, anti-money
laundering, trade and economic sanctions, export controls, anti-harassment, anti-discrimination, or other legal and regulatory
requirements, could subject us to, among other things, civil and criminal penalties or material fines, profit disgorgement,
injunctions on future conduct and securities litigation, and also could cause significant reputational and business harm to us.
Such misconduct may undermine our due diligence efforts with respect to such portfolio companies and could negatively affect
the valuations of the investments by our funds in such portfolio companies. Losses to our funds and us also could result from
misconduct or other actions by service providers, such as administrators, consultants, or other advisors, if such service
providers improperly use or disclose confidential information, misappropriate funds, or violate legal or regulatory obligations.
In addition, we may face an increased risk of such misconduct to the extent our investment in non-U.S. markets, particularly
emerging markets, increases.
Another pandemic or global health crisis like the COVID-19 pandemic may adversely impact our performance and results of
operations.
From 2020 to 2022, in response to the COVID-19 pandemic, many countries instituted quarantine restrictions and took
other measures to limit the spread of the virus. This resulted in labor shortages and disruption of supply chains and contributed
to prolonged disruption of the global economy. A widespread reoccurrence of another pandemic or global health crisis could
increase the possibility of periods of increased restrictions on business operations, which may adversely impact our business,
financial condition, results of operations, liquidity, and prospects materiality and exacerbate many of the other risks discussed
in this “Risk Factors” section.
In the event of another pandemic or global health crisis like the COVID-19 pandemic, our funds’ portfolio companies
may experience decreased revenues and earnings, which may adversely impact our ability to realize value from such
investments and in turn reduce our performance revenues. Investments in certain sectors, including hospitality, location-based
entertainment, retail, travel, leisure, and events and, in certain geographies, office and residential, could be particularly
negatively impacted, as was the case during the COVID-19 pandemic. Our funds’ portfolio companies also may face increased
credit and liquidity risk due to volatility in financial markets, reduced revenue streams, and limited access or higher cost of
financing, which may result in potential impairment of our or our funds’ investments. In addition, borrowers of loans, notes,
and other credit instruments in our credit funds’ portfolios may be unable to meet their principal or interest payment obligations
or satisfy financial covenants, and tenants leasing real estate properties owned by our funds may not be able to pay rents in a
timely manner or at all, resulting in a decrease in value of our funds’ credit and real estate investments. In the event of
significant credit market contraction as a result of a pandemic or similar global health crisis, certain of our funds may be limited
in their ability to sell assets at attractive prices or in a timely manner in order to avoid losses and margin calls from credit
providers. In our liquid and semi-liquid investment vehicles, such a contraction could cause investors to seek liquidity in the
form of redemptions or repurchase of interests from our funds, adversely impacting management fees. Our management fees
also may be negatively impacted if we experience a decline in the pace of capital deployment or fundraising.
In addition, a pandemic or global health crisis may pose enhanced operational risks. For example, our employees may
become sick or otherwise unable to perform their duties for an extended period, and extended public health restrictions and
remote working arrangements may impact employee morale, integration of new employees, and preservation of our culture.
Remote working environments also may be less secure and more susceptible to hacking attacks, including phishing and social
engineering attempts. Moreover, our third-party service providers could be impacted by an inability to perform due to
pandemic-related restrictions or by failures of, or attacks on, their technology platforms.
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Certain policies and procedures implemented to mitigate potential conflicts of interest and address certain regulatory
requirements may reduce the synergies across our various businesses and inhibit our ability to maintain our collaborative
culture.
We consider our culture and the ability of our professionals to communicate and collaborate across funds, industries,
and geographies one of our significant competitive strengths. As a result of the expansion of our platform into various lines of
business in the asset management industry, our acquisition of new businesses, and the growth of our managed account business,
we are subject to a number of actual and potential conflicts of interest and subject to greater regulatory oversight than if we had
one line of business. For example, certain regulatory requirements mandate us to restrict access by certain personnel in our
funds to information about certain transactions or investments being considered or made by those funds. In addition, as we
continue to expand our platform, the allocation of investment opportunities among our investment funds is expected to become
more complex. In addressing these conflicts and regulatory requirements across our various businesses, we have and may
continue to implement certain policies and procedures, such as information barriers. As a practical matter, the establishment and
maintenance of such information barriers means that collaboration between our investment professionals across various
platforms or with respect to certain investments may be limited, reducing potential synergies that we cultivate across these
businesses. For example, although we maintain ultimate control over the Global Investment Solutions segment’s constituent
firm, AlpInvest, we have established an information barrier between the management teams at AlpInvest and the rest of Carlyle.
See “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Our Global Investment Solutions
business is subject to additional risks.” In addition, we may come into possession of material non-public information with
respect to issuers in which we may be considering making an investment. Consequently, we may be precluded from providing
such information or other ideas to our other businesses that could benefit from such information.
Our failure to deal appropriately with conflicts of interest in our investment business could damage our reputation and
adversely affect our businesses.
As we have expanded, and continue to expand, the number and scope of our businesses, we increasingly confront
potential conflicts of interest relating to our funds’ investment activities. In this respect, investment manager conflicts of interest
continue to be a significant area of focus for regulators and the media. Because of our size and the variety of businesses and
investment strategies that we pursue, we may face a higher degree of scrutiny compared with investment managers that are
smaller or focus on fewer asset classes. Certain of our funds may have overlapping investment objectives, including funds that
have different fee structures and/or investment strategies that are more narrowly focused. Potential conflicts may arise with
respect to allocation of investment opportunities among us, our funds, and our affiliates, including to the extent that the fund
documents do not mandate a specific investment allocation. For example, we may allocate an investment opportunity that is
appropriate for two or more investment funds in a manner that excludes one or more funds or results in a disproportionate
allocation based on factors or criteria that we determine, such as sourcing of the transaction, specific nature of the investment,
or size and type of the investment, among other factors. We also may decide to provide a co-investment opportunity to certain
investors in lieu of allocating more of that investment to our funds. In addition, the challenge of allocating investment
opportunities to certain funds may be exacerbated as we expand our business to include more lines of business, including more
public vehicles. Allocating investment opportunities appropriately frequently involves significant and subjective judgments.
The risk that fund investors or regulators could challenge allocation decisions as inconsistent with our obligations under
applicable law, governing fund agreements, or our own policies cannot be eliminated. Moreover, the perception of
noncompliance with such requirements or policies could harm our reputation with fund investors.
In addition, we may cause different funds to invest in a single portfolio company, for example, where the fund that
made an initial investment no longer has capital available to invest. We also may cause different funds that we manage to
purchase different classes of securities in the same portfolio company. For example, one of our CLO funds could acquire a debt
security issued by the same company in which one of our private equity funds owns common equity securities. A direct conflict
of interest could arise between the debt holders and the equity holders if such a company were to develop insolvency concerns,
and we would have to carefully manage that conflict. A decision to acquire material non-public information about a company
while pursuing an investment opportunity for a particular fund gives rise to a potential conflict of interest when it results in our
having to restrict the ability of other funds to take any action with respect to that company. Our affiliates or portfolio companies
may be service providers or counterparties to our funds or portfolio companies and receive fees or other compensation for
services that are not shared with our fund investors. In such instances, we may be incentivized to cause our funds or portfolio
companies to purchase such services from our affiliates or portfolio companies rather than an unaffiliated service provider even
though a third-party service provider could potentially provide higher quality services or offer them at a lower cost. In addition,
conflicts of interest may exist in the valuation of our investments, as well as the personal trading of employees and the
allocation of fees and expenses among us, our funds and their portfolio companies, and our affiliates. Moreover, in certain,
infrequent instances we may purchase an investment alongside one of our investment funds or sell an investment to one of our
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investment funds and conflicts may arise in respect of the allocation, pricing, and timing of such investments and the ultimate
disposition of such investments. A failure to appropriately deal with these conflicts, among others, could negatively impact our
reputation and ability to raise additional funds or result in potential litigation or regulatory action against us. Any steps taken by
the SEC to preclude or limit certain conflicts of interest would make it more difficult for our funds to pursue transactions that
may otherwise be attractive to the fund and its investors, which may adversely impact fund performance.
Risks Related to Our Business Operations
Risks Related to the Assets We Manage
The asset management business is intensely competitive.
The asset management business is intensely competitive, with competition based on a variety of factors, including
investment performance, business relationships, quality of service provided to clients, investor availability of capital and
willingness to invest, fund terms (including fees and liquidity terms), brand recognition, types of products offered,
consideration of ESG issues, and business reputation. Our investment business, as well as our investment funds, competes with
a number of private funds, specialized investment funds, funds structured for individual investors, hedge funds, funds of hedge
funds, and other sponsors managing pools of capital, as well as corporate buyers, traditional asset managers, commercial banks,
investment banks, and other financial institutions (including sovereign wealth funds), and we expect that competition will
continue to increase. For example, certain traditional asset managers have developed their own private equity and retail
platforms and are marketing other asset allocation strategies as alternatives to fund investments. In addition, developments in
financial technology, or fintech, such as distributed ledger technology, or blockchain, have the potential to disrupt the financial
industry and change the way financial institutions, as well as asset managers, do business. A number of factors serve to increase
our competitive risks:
•a number of our competitors in some of our businesses have greater financial, fundraising, technical, research,
marketing, and other resources and more personnel than we do;
•some of our funds may not perform as well as competitors’ funds or other available investment products;
•fund investors may reduce their investments in our funds or decrease their allocations in new funds based on a
variety of factors, such as the occurrence of an economic downturn, their available capital, regulatory
requirements, a desire to consolidate their relationships with investment firms, or other considerations;
•several of our competitors have significant amounts of capital, and many of them have similar investment
objectives to ours, which may create additional competition for investment opportunities and may reduce the
size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit;
•some of our competitors, particularly strategic competitors, may have a lower cost of capital, which may be
exacerbated by limits on the deductibility of interest expense;
•some of our competitors may have higher risk tolerances, different risk assessments, or lower return
thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively
than us for investments that we want to make or seek exit opportunities through different channels, such as
special purpose acquisition vehicles;
•some of our competitors may be subject to less regulation and, accordingly, may have more flexibility to
undertake and execute certain businesses or investments than we do and/or bear less compliance expense than
us;
•some of our competitors may have more flexibility than us in raising certain types of investment funds under
the investment management contracts they have negotiated with their investors;
•some of our competitors may be more successful than us in development of new products to address investor
demand for new or different investment strategies and/or regulatory changes, including with respect to
products with mandates that incorporate ESG considerations, or products that are developed for individual
investors or that target insurance capital;
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•some of our competitors may have better expertise or be regarded by investors as having better expertise in a
specific asset class or geographic region than we do;
•our competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an
investment, which may provide them with a competitive advantage in bidding for an investment;
•our competitors have instituted or may institute low-cost, high-speed financial applications and services based
on artificial intelligence and new competitors may enter the asset management space using new investment
platforms based on artificial intelligence;
•there are relatively few barriers to entry impeding the formation of new investment firms, and the successful
efforts of new entrants into our various businesses, including former “star” portfolio managers at large
diversified financial institutions as well as such institutions themselves, is expected to continue to result in
increased competition;
•some investors may prefer to pursue investments directly instead of investing through one of our funds;
•some investors may prefer to invest with an investment manager that is not publicly traded or is smaller, with
a more limited number of investment products that it manages; and
•other industry participants will, from time to time, seek to recruit our investment professionals and other
employees away from us.
In addition, technological innovation, including the use of artificial intelligence and data science, has the potential to
disrupt the financial industry and change the way financial institutions, including asset managers, do business. Some of our
competitors may be more successful than us in the development and implementation of new technologies, including services
and platforms based on artificial intelligence, to address investor demand or improve operations. If we are unable to adequately
advance our capabilities in these areas, or do so at a slower pace than others in our industry, we may be at a competitive
disadvantage.
We also may lose investment opportunities in the future if we do not match investment prices, structures, products, or
terms offered by competitors. Alternatively, we may experience decreased rates of return and increased risks of loss if we match
investment prices, structures, products, and terms offered by competitors. Moreover, if we are forced to compete with other
asset managers on the basis of price, we may not be able to maintain our current fund fee and carried interest terms. We have
historically competed primarily on the performance of our funds, and not on the level of our fees or carried interest relative to
those of our competitors. However, there is a risk that fees and carried interest in the investment management industry will
decline, without regard to the historical performance of a manager. In addition, some of our competitors may be willing to pay
higher placement fees in order to gain distribution of their private wealth products. Fee or carried interest income reductions, or
placement fee increases, on existing or future products, without corresponding decreases in our cost structure, would adversely
affect our revenues and profitability.
Moreover, the attractiveness of our investment funds relative to investments in other investment products could
decrease depending on economic conditions. Any new or incremental regulatory measures for the U.S. financial services
industry may increase costs and create regulatory uncertainty and additional competition for many of our funds. See “Risks
Related to Our Business Operations—Risks Related to the Assets We Manage—Our investors may negotiate to pay us lower
management fees and the economic terms of our future funds may be less favorable to us than those of our existing funds,
which could adversely affect our revenues.”
These competitive pressures could adversely affect our ability to make successful investments and limit our ability to
raise future investment funds, either of which would adversely impact our business, revenue, results of operations, and cash
flow.
Poor performance of our investment funds would cause a decline in our revenue, income, and cash flow, may obligate us to
repay carried interest previously paid to us, and could adversely affect our ability to raise capital for future investment
funds.
In the event that any of our investment funds were to perform poorly, our revenue, income, and cash flow would
decline. Investors could also demand lower fees or fee concessions for existing or future funds, which would likewise decrease
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our revenue or require us to record an impairment of intangible assets and/or goodwill in the case of an acquired business. In
some of our funds, such as our carry funds, a reduction in the value of the portfolio investments held in such funds could result
in a reduction in the carried interest we earn or in our management fees. In our CLOs, defaults or downgrades of the CLOs’
underlying collateral obligations could cause failures of certain over collateralization tests and the potential for insufficient
funds to pay expected management fees on any such CLO, which would result in either a temporary deferral or permanent loss
of such management fees. See “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Our
CLO business and investment into CLOs involves certain risks.”
We also could experience losses on our investment of our own capital into our funds as a result of poor performance
by our investment funds. If, as a result of poor performance of later investments in a carry fund’s life, the fund does not achieve
certain investment returns for the fund over its life, we will be obligated to repay the amount by which carried interest that was
previously distributed to us exceeds the amount to which we are ultimately entitled. These repayment obligations may be
related to amounts previously distributed to our senior Carlyle professionals prior to the completion of our initial public
offering, with respect to which our stockholders did not receive any benefit. See “Risks Related to Our Business Operations—
Risks Related to the Assets We Manage—We may need to pay “giveback” obligations if and when they are triggered under the
governing agreements with our investors” and Note 8, Commitments and Contingencies, to the consolidated financial
statements in Part II, Item 8 of this Annual Report on Form 10-K.
Poor performance of our investment funds could make it more difficult for us to raise new capital. Investors in our
funds may decline to invest in future investment funds we raise. Investors and potential investors in our funds continually assess
our investment funds’ performance, and our ability to raise capital for existing and future investment funds and avoid excessive
redemption levels will depend on our investment funds’ continued satisfactory performance. Accordingly, poor fund
performance has in the past deterred and may in the future deter investment in our funds and thereby decrease the capital
invested in our funds and, ultimately, our management fee revenue.
Moreover, from time to time, we may pursue new or different investment strategies and expand into geographic
markets and businesses that may not perform as expected and result in poor performance by us and our investment funds,
despite our initial investment thesis. In addition to the risk of poor performance, such activity may subject us to several risks
and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities
profitably or without incurring inappropriate amounts of risk; the diversion of management’s attention from our core business;
known or unknown contingent liabilities, which could result in unforeseen losses for us and our funds; the disruption of
ongoing businesses; and compliance with additional regulatory requirements.
The historical returns attributable to our funds, including those presented in this Annual Report on Form 10-K, should not
be considered as indicative of the future results of our funds or of our future results or of any returns expected on an
investment in our common stock.
We have presented in this Annual Report on Form 10-K information relating to the historical performance of our
investment funds. The historical and potential future returns of the investment funds that we advise, however, are not directly
linked to returns in our common stock. Therefore, any continued positive performance of the investment funds that we advise
will not necessarily result in positive returns on an investment in our common stock. However, poor performance of the
investment funds that we advise would cause a decline in our revenue from such investment funds and could therefore have a
negative effect on our performance, our ability to raise future funds, and in all likelihood the returns on an investment in our
common stock.
Moreover, with respect to the historical returns of our investment funds:
•our historical returns derive largely from the performance of our existing funds, and we may create new funds
in the future that reflect a different asset mix and different investment strategies, as well as a varied
geographic and industry exposure as compared to our present funds, and any such new funds could have
lower returns than our existing or previous funds;
•the performance of our carry funds reflects our valuation of the unrealized investments held in those funds
using assumptions that we believe are reasonable under the circumstances, but the actual realized return on
these investments will depend on, among other factors, future operating results and the value of assets and
market conditions at the time of disposition all of which may differ from the assumptions on which the
valuations in our historical returns are based, which may adversely affect the ultimate value realized from
those unrealized investments;
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•in recent years, there has been increased competition for private equity investment opportunities resulting
from the increased amount of capital invested in alternative investment funds, high liquidity in debt markets,
and strong equity markets, and the increased competition for investments may reduce our returns in the
future;
•the rates of returns of some of our funds in certain years have been positively influenced by a number of
investments that experienced rapid and substantial increases in value following the dates on which those
investments were made, which may not occur with respect to future investments;
•our investment funds’ returns in some years have benefited from investment opportunities and general market
conditions, including lower interest rates and rates of inflation than present market conditions, that may have
been significantly more favorable for generating positive performance than current market conditions or
market conditions that we may experience in the future and may not repeat themselves;
•our current or future investment funds might not be able to avail themselves of comparable investment
opportunities or market conditions, and the circumstances under which our funds may make future
investments may differ significantly from those conditions prevailing in the past;
•newly established funds may generate lower returns during the period that they take to deploy their capital;
and
•the introduction of fund-level leverage in certain more recent funds has increased the rates of returns in those
funds compared to what they would have been without the use of such leverage.
Our performance in recent years generally has benefited from recent high multiples and asset prices. In the current
market environment, we expect that earning such returns on new investments will be much more difficult than in the past and
the future internal rate of return for any current or future fund may vary considerably from the historical internal rate of return
generated by any particular fund or for our funds as a whole. Future returns also will be affected by the risks described
elsewhere in this Annual Report on Form 10-K, including risks of the industries and businesses in which a particular fund
invests. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Segment Analysis—Fund Performance Metrics” for additional information.
Risk management activities may adversely affect the return on our and our funds’ investments.
When managing our exposure to market risks, we may (on our own behalf or on behalf of our funds) from time to time
use forward contracts, options, swaps, caps, collars, and floors or pursue other strategies or use other forms of derivative
instruments to limit our exposure to changes in the relative values of investments that may result from market developments,
including changes in prevailing interest rates, currency exchange rates, and commodity prices. The use of derivative financial
instruments and other risk management strategies may not be properly designed to hedge, manage, or otherwise reduce the risks
we have identified. In addition, we may not be able to identify, or may not have fully identified, all applicable material market
risks to which we are exposed. We also may choose not to hedge, in whole or in part, any of the risks that have been identified.
The success of any hedging or other derivatives transactions generally will depend on our ability to correctly predict market
changes, the degree of correlation between price movements of a derivative instrument, the position being hedged, the
creditworthiness of the counterparty, and other factors, some of which may be beyond our ability to hedge. As a result, while
we may enter into a transaction in order to reduce our exposure to market risks, the unintended market changes may result in
poorer overall investment performance than if it had not been executed. Such transactions may also limit the opportunity for
gain if the value of a hedged position increases.
While such hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other
risks. These arrangements may require the posting of cash collateral at a time when a fund has insufficient cash or illiquid assets
such that the posting of the cash is either impossible or requires the sale of assets at prices that do not reflect their underlying
value. In addition, if our derivative counterparties or clearinghouses fail to meet their obligations with respect to the posting of
cash collateral, our efforts to mitigate certain risks may be ineffective. These hedging arrangements also may generate
significant transaction costs, including potential tax costs, which reduce the returns generated by a fund.
In addition, the regulation of derivatives and commodity interest transactions in the United States and other countries
is a rapidly changing area of law and is subject to ongoing modification by governmental and judicial action. Newly instituted
and amended regulations could significantly increase the cost of entering into derivative contracts (including through
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requirements to post collateral, which could negatively impact available liquidity), materially alter the terms of derivative
contracts, reduce the availability of derivatives to protect against risks, reduce our ability to restructure our existing derivative
contracts, and increase our exposure to less creditworthy counterparties. Moreover, the CFTC may in the future require certain
foreign exchange products to be subject to mandatory clearing, which could increase the cost of entering into currency hedges.
Trade negotiations and related government actions may create regulatory uncertainty for our funds’ portfolio companies
and our investment strategies and adversely affect the profitability of our funds’ portfolio companies.
In recent years, the U.S. government has indicated its intent to alter its approach to international trade policy and, in
some cases, to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with
foreign countries, and has made proposals and taken actions related thereto. For example, the U.S. government has imposed
tariffs on certain foreign goods, including from China, such as steel and aluminum. Increasingly, the new administration also
has threatened or targeted broader swathes of countries with punitive trade measures, such as universal steel and aluminum
tariffs and reciprocal tariffs, including against Canada, Mexico, and Europe. Some foreign governments, including China,
Canada, and Mexico, have threatened or instituted retaliatory tariffs on certain U.S. goods.
In addition, the United States has implemented several economic sanctions programs and export controls that
specifically target Chinese entities and nationals on national security grounds, including, for example, with respect to China’s
response to political demonstrations in Hong Kong and China’s conduct concerning the treatment of Uyghurs and other ethnic
minorities in its Xinjiang province. The United States also has implemented certain sanctions against entities participating in
China’s military industrial complex and providing support to the country’s military, intelligence, and surveillance apparatuses.
These sanctions impose certain restrictions on U.S. persons and entities buying or selling publicly traded securities of
designated entities. Further escalation of the “trade war” between the United States and China, the countries’ inability to reach
further trade agreements, or the continued use of reciprocal sanctions by each country, may negatively impact opportunities for
investment as well as the rate of global growth, particularly in China, which has and continues to exhibit signs of slowing
growth. Such slowing growth could adversely affect the revenues and profitability of our funds’ portfolio companies.
Moreover, there is uncertainty as to any additional actions that may be taken under the new administration with respect
to U.S. trade policy. Further governmental actions related to the imposition of tariffs or other trade barriers or changes to
international trade agreements or policies, could further increase costs, decrease margins, reduce the competitiveness of
products and services offered by current and future portfolio companies, and adversely affect the revenues and profitability of
companies whose businesses rely on goods imported from outside of the United States. See “Risks Related to Our Business
Operations—Risks Related to the Assets We Manage—Our funds make investments in companies that are based outside of the
United States, which may expose us to additional risks not typically associated with investing in companies that are based in the
United States.”
Our asset management business depends in large part on our ability to raise capital from third-party investors. If we are
unable to raise capital from third-party investors, we would be unable to collect management fees or deploy their capital into
investments and potentially collect carried interest, which would materially reduce our revenue and cash flow and adversely
affect our financial condition.
We raised $108 billion in new capital commitments in the last three years, with 2024 activity being driven by
fundraising in our real estate business (Carlyle Real Estate Partners), our Global Credit business (including credit opportunities,
third-party capital raised in our asset-backed finance business, and other diversified credit strategies), and our flagship
secondaries and co-investment funds within our Global Investment Solutions segment. We cannot assure that our prior success
in raising capital will continue in the future. In this respect, we anticipate the fundraising landscape will continue to be
increasingly competitive as limited partners continue to reassess their portfolio allocation targets in light of market volatility
and their liquidity requirements. As a result, fundraising in certain products—particularly in corporate private equity strategies
—may take longer to complete and fund sizes may not meet levels they otherwise would in a more favorable market
environment. Slowdowns in fundraising also may delay catch-up management fees that would be charged to fund investors in
subsequent closings and smaller fund sizes have resulted in and could continue to result in lower management fees in the future.
Our ability to raise capital from third-party investors depends on a number of factors, including certain factors that are
outside our control. Certain of these factors, such as economic and market conditions (including the level of interest rates and
stock market performance), the pace of distributions from our funds and from the funds of other asset managers, or the asset
allocation rules or regulations or investment policies to which such third-party investors are subject, whether by their own
policy or the laws and regulations of their respective jurisdictions, could inhibit or restrict the ability of third-party investors to
make investments in our investment funds. For example, lawmakers across a number of states have put forth proposals or
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expressed intent to take steps to reduce or minimize the ability of state pension funds to invest in alternative asset classes,
including by proposing to increase the reporting or other obligations applicable to state pension funds that invest in such asset
classes. Such proposals or actions would potentially discourage investment by such state pension funds in alternative asset
classes by imposing meaningful compliance burdens and costs on them, which could adversely affect our ability to raise capital
from such state pension funds. Other states could potentially take similar actions, which may further impair our access to capital
from an investor base that has historically represented a significant portion of our fundraising.
Third-party investors in private equity, real assets, and private credit funds typically use distributions from prior
investments to meet future capital calls. In cases where valuations of existing investments fall, the investment pace is delayed
and/or the pace of distributions slows, investors may be unable or unwilling to make new commitments or fund existing
commitments to third-party management investment funds such as those advised by us. Moreover, many funds sponsored by us
and our competitors have in recent years invested more rapidly than in the past. As a result, investors may delay making new
commitments until such time these investments start distributing capital.
There can be no assurance that historical or current levels of commitments to our funds will continue. For example,
there has been a shift away from defined benefit pension plans to defined contributions plans, which could reduce the amount of
assets available for us to manage on behalf of certain of our clients. In addition, investors may downsize their investment
allocations to alternative managers, including private funds and fund of funds vehicles, to rebalance a disproportionate
weighting of their overall investment portfolio among asset classes. Investors also may seek to consolidate their investments
with a smaller number of investment managers or prefer to pursue investments directly instead of investing through our funds,
each of which could impact the amount of allocations they make to our funds. For example, certain institutional investors have
demonstrated a preference to in-source their own investment professionals and to make direct investments in alternative assets
without the assistance of alternative asset advisers like us. Such institutional investors may become our competitors and could
cease to be our clients.
Moreover, as some existing investors cease or significantly curtail making commitments to alternative investment
funds, we may need to identify and attract new investors in order to maintain or increase the size of our investment funds. The
ongoing changes in international and domestic tax regulations may adversely impact the tax neutrality of our funds, which
could in turn limit investment in our funds from certain classes of investors. We are working to create avenues through which
we expect to attract a new base of retail or individual investors. There can be no assurances that we can find or secure
commitments from those new investors. Our ability to raise new funds could similarly be hampered if the general appeal of
private equity and alternative investments were to decline.
An investment in a private equity, credit, or real estate fund is more illiquid and the returns on such investment may be
more volatile than an investment in securities for which there is a more active and transparent market. Private equity, credit, and
real estate investments could fall into disfavor as a result of concerns about liquidity and short-term performance. Such
concerns could be exhibited, in particular, by public pension funds, which have historically been among the largest investors in
alternative assets. Concerns with liquidity could cause such public pension funds to reevaluate the appropriateness of alternative
investments.
In addition, the evolving preferences of our fund investors may necessitate that alternatives to the traditional
investment fund structure, such as managed accounts, smaller funds, and co-investment vehicles, become a larger part of our
business going forward. Certain investors also have implemented or may implement restrictions against investing in certain
types of asset classes or sectors, such as hydrocarbons, which could affect our ability to raise new funds focused on those asset
classes, such as funds focused on conventional energy or natural resources, and which could have a negative impact on our
ability to exit certain of our energy investments or our ability to invest capital in our conventional energy funds. Given that
funds focused on investing in carbon-based energy remain a part of our business (4% of total AUM as of December 31, 2024),
the persistence of weakened market fundamentals in the energy sector could translate into future performance below investor
expectations which, together with negative sentiments around carbon energy funds, could result in less investor demand for
these funds in the future. If we were unable to raise the next generation of our energy-related funds, at the same levels or at all,
our fee-paying AUM and future management fees could be adversely impacted. This could increase our cost of raising capital at
the scale we have historically achieved. This also could cause an impairment of our equity method investment in NGP in the
future. As of December 31, 2024, we continue to believe that our investment in NGP is not impaired.
The failure to successfully raise capital commitments to new investment funds also may expose us to credit risk in
respect of financing that we may provide to such funds. When existing capital commitments to a new investment fund are
insufficient to fund in full a new investment fund’s participation in a transaction, we may lend money to or borrow money from
financial institutions on behalf of such investment funds to bridge this difference and repay this financing with capital from
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subsequent investors to the fund. Our inability to identify and secure capital commitments from new investors to these funds
may expose us to losses (in the case of money that we lend directly to such funds) or adversely impact our ability to repay such
borrowings or otherwise have an adverse impact on our liquidity position. Moreover, if we seek to expand into other business
lines, we may be unable to raise a sufficient amount of capital to adequately support such businesses. The failure of our
investment funds to raise capital in sufficient amounts could result in a decrease in our AUM, as well as management fee and
transaction fee revenue, or could result in a decline in the rate of growth of our AUM and management fee and transaction fee
revenue, any of which could have a material adverse impact on our revenues and financial condition. Our past experience with
growth of AUM provides no assurance with respect to the future.
We have increasingly undertaken business initiatives to increase the number and type of investment products we offer to
retail investors, which could expose us to new and greater levels of risk.
Although retail investors have been part of our historic distribution efforts, we have increasingly undertaken business
initiatives to increase the number and type of investment products we offer to high-net-worth individuals, family offices, and
mass affluent investors in the United States and other jurisdictions around the world. In particular, we create investment
products designed for investment by retail investors in the United States, some of whom are not accredited investors, or similar
investors in non-U.S. jurisdictions, including in Europe. In certain instances, our funds are distributed to such investors
indirectly through third-party managed vehicles sponsored by brokerage firms, private banks, or third-party feeder providers,
and in other instances directly to the clients of private banks, independent investment advisors, and brokers.
Accessing retail investors and offering products directed at such investors exposes us to new and greater levels of risk,
including heightened litigation and regulatory enforcement, an increased compliance burden, and more complex administration
and accounting operations. We may be subject to claims related to matters such as the adequacy of disclosures, appropriateness
of fees, suitability, and board of directors oversight, each which could result in civil lawsuits, regulatory penalties, and
enforcement actions. Our registered investment advisers also could be subject to direct or derivative claims from a fund’s
investors or board of directors for alleged mismanagement of the fund. In addition, regulatory requirements imposing
limitations on the ability of affiliates of certain of our vehicles to engage in certain transactions may limit our funds’ ability to
engage in otherwise attractive investment opportunities.
To the extent distribution of such products is through new channels and markets, including through an increasing
number of distributors with whom we engage, we may not be able to effectively monitor or control the manner of their
distribution, which could result in litigation or regulatory action against us, including with respect to, among other things,
claims that products distributed through such channels are distributed to investors for whom they are unsuitable, claims related
to conflicts of interest or the adequacy of disclosure to investors, or claims that the products are distributed in a manner
inconsistent with our regulations requirements or otherwise inappropriate manner. In addition, regulation applicable to our
arrangements with such distributors and channels increases the compliance burden associated with onboarding new distributors
or pursuing new distribution channels, resulting in increased cost and complexity. Although we engage in due diligence and
onboarding procedures that seek to uncover issues relating to the third-party channels through which retail investors access our
investment products, we do not control and have limited information regarding many of these third-party channels and thus we
are exposed to risks of reputational damage, regulatory scrutiny, and legal liability to the extent such third parties improperly
sell our products to investors. This risk is heightened by the continuing increase in the number of third parties through whom
we distribute our investment products around the world and who we do not control. For example, in certain instances, we may
be viewed by a regulator as responsible for the content of materials prepared by third parties.
Likewise, there is a risk that our employees involved in the direct distribution of our products, or employees who
oversee independent advisors, brokerage firms, and other third parties around the world involved in distributing our products,
do not follow our compliance and supervisory procedures. In addition, the distribution of such products, including through new
channels whether directly or through market intermediaries, could expose us to allegations of improper conduct and/or actions
by state and federal regulators in the United States and regulators in jurisdictions outside of the United States with respect to,
among other things, product suitability, distributor eligibility, investor classification, compliance with securities laws, conflicts
of interest, and the adequacy of disclosure to investors to whom our products are distributed through those channels.
As we expand the distribution of products to retail investors outside of the United States, we are increasingly exposed
to risks in non-U.S. jurisdictions. While many of the risks we face in non-U.S. jurisdictions are similar to those that we face in
the distribution of products to retail investors in the United States, securities laws and other applicable regulatory regimes may
be extensive, complex, and vary by jurisdiction. In addition, the distribution of products to individual investors outside of the
United States may involve complex structures (such as distributor-sponsored feeder funds or nominee/omnibus investors) and
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market practices that vary by local jurisdiction. As a result, this expansion subjects us to additional complexity, litigation, and
regulatory risk.
Moreover, our initiatives to expand our retail investor base, including outside of the United States, requires the
investment of significant time, effort, and resources, including the potential hiring of additional personnel, the implementation
of new operational, compliance, and other systems and processes, and the development or implementation of new technology.
Our efforts to continue to grow the assets we manage on behalf of retail investors may not be successful.
Our investors may negotiate to pay us lower management fees and the economic terms of our future funds may be less
favorable to us than those of our existing funds, which could adversely affect our revenues.
In connection with raising new funds or securing additional investments in existing funds, we negotiate terms for such
funds and investments with existing and potential investors. The outcome of such negotiations could result in our agreement to
terms that are materially less favorable to us than the terms of prior funds we have advised or funds advised by our competitors.
Such terms could restrict our ability to raise investment funds with investment objectives or strategies that compete with
existing funds, reduce fee revenues we earn, reduce the percentage of profits on third-party capital that we share in or add
expenses and obligations for us in managing the fund, or increase our potential liabilities, all of which could ultimately reduce
our profitability. In addition, a change in terms that increases the amount of fee revenue the fund investors are entitled to could
result in a significant decline in revenue generated from transaction fees. For instance, our current generations of U.S., Europe,
and Asia buyout funds have increased the percentage of transaction fees that are shared with fund investors from 80% to 100%
of the allocable fees we generate. To the extent we change our fee practices for other successor funds, we could experience a
meaningful decline in the amount of transaction fee revenue we earn. In particular, if our fund investors do not continue to
agree that we are permitted to retain fees we derive from capital markets transactions involving our portfolio companies, the
ability of our GCM group to produce fee revenue could be significantly hindered.
In addition, as institutional investors increasingly consolidate their relationships with investment firms and competition
becomes more acute, we may receive more requests to modify the terms of our new funds, including reductions in management
fees. Any agreement to changes in terms less favorable to us could result in a material decrease in our profitability.
Moreover, certain institutional investors have publicly criticized certain fund fee and expense structures, including
management fees. We have received and expect to continue to confront requests from a variety of investors and groups
representing investors to decrease fees and to modify our carried interest and incentive fee structures, which could result in a
reduction in or delay in the timing of receipt of the fees and carried interest and incentive fees we earn. In addition to
negotiating the overall fund rate of the management fees offered, certain fund investors have negotiated alternative management
fee structures in several of our investment funds. For example, certain funds have offered a management fee rate discount for
certain investors that came into the first closing of each fund. In certain cases, we have agreed to charge management fees based
on invested capital or net asset value as opposed charging management fees on committed capital. Further, the SEC’s focus on
certain fund fee and expense arrangements may lead to increased publicity that could cause fund investors to further resist
certain fees and expense reimbursements. Any modification of our existing fee or carry arrangements or the fee or carry
structures for new investment funds could adversely affect our results of operations. See “Risks Related to Our Business
Operations—Risks Related to the Assets We Manage—The asset management business is intensely competitive.”
We may need to pay “giveback” obligations if and when they are triggered under the governing agreements with our
investors.
If, at the end of any of the life of our Global Private Equity and Global Credit carry funds (or earlier with respect to
certain of our funds), the carry fund has not achieved investment returns that (in most cases) exceed the preferred return
threshold or (in almost all cases) the general partner receives net profits over the life of the fund in excess of its allocable share
under the applicable partnership agreement, we will be obligated to repay an amount equal to the extent to which carried
interest that previously was distributed to us exceeds the amounts to which we are ultimately entitled. This repayment
obligation is known as a “giveback” obligation. As of December 31, 2024, we had accrued a giveback obligation of $44.0
million, representing the giveback obligation that would need to be paid by the firm if the carry funds were liquidated at their
current fair values at that date, and of which approximately $32.5 million is attributable to us. The remaining obligations are
related to amounts previously distributed to our senior Carlyle professionals, the majority of which relates to the accrued
giveback obligation from CSP III and the Legacy Energy Funds.
When payment of a giveback obligation is anticipated (or “realized”), the portion of this liability that is expected to be
borne by the common stockholders (i.e., the amount not expected to be funded by Carlyle professionals) has the effect of
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reducing our Distributable Earnings. Any remaining giveback obligation required to be funded on behalf of our funds would
generally be due upon the liquidation of the remaining assets from the funds.
If, as of December 31, 2024, all of the investments held by our carry funds were deemed worthless, the amount of
realized and distributed carried interest subject to potential giveback would have been $1.4 billion, on an after-tax basis where
applicable. As of December 31, 2024, we have realized $256.5 million in aggregate giveback obligations since inception, which
were funded primarily through collection of employee receivables related to giveback obligations and from Carlyle
professionals and other non-controlling interests for their portion of the obligation. Of the $256.5 million in aggregate giveback
obligations realized from inception to December 31, 2024, $86.5 million was attributable to Carlyle. See Part II, Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures—
Investment Income.”
Although a giveback obligation is specific to each person who received a distribution, and not a joint obligation, the
governing agreements of our funds generally provide that to the extent a recipient does not fund his or her respective share, then
we may have to fund such additional amounts beyond the amount of carried interest we retained, although we generally will
retain the right to pursue any remedies that we have under such governing agreements against those carried interest recipients
who fail to fund their obligations. As of December 31, 2024, approximately $11.5 million of our $44.0 million accrued
giveback obligation is attributable to various current and former senior Carlyle professionals. We have historically withheld a
portion of the cash from carried interest distributions to individual senior Carlyle professionals and other employees as security
for their potential giveback obligations. We may need to use or reserve cash to repay such giveback obligations instead of using
the cash for other purposes. See Part I, Item 1 “Business—Structure and Operation of Our Investment Funds—Incentive
Arrangements / Fee Structure” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Contractual Obligations—Contingent Obligations (Giveback)” and Notes 2, Summary of Significant
Accounting Policies, and 8, Commitments and Contingencies, to the consolidated financial statements in Part II, Item 8 of this
Annual Report on Form 10-K.
Third-party investors in substantially all of our carry funds have the right to remove the general partner of the fund for
cause, to accelerate the liquidation date of the investment fund without cause by a simple majority vote, and to terminate the
investment period under certain circumstances and investors in certain of the investment funds we advise may redeem their
investments. These events would lead to a decrease in our revenues, which could be substantial.
The governing agreements of almost all of our carry funds, other than our AlpInvest funds as discussed below, provide
that, subject to certain conditions, third-party investors in those funds have the right to remove the general partner of the fund
for cause or to accelerate the liquidation date of the investment fund without cause by a simple majority vote. In addition, our
investment vehicles that are structured as “funds of one,” or separately managed accounts, have a single investor or a few
affiliated investors that typically have the right to terminate the investment period or cause a dissolution of the vehicle under
certain circumstances. These actions would result in a reduction in management fees we would earn from such investment
funds, vehicles, or accounts, and could result in a significant reduction in the expected amounts of total carried interest and
incentive fees from those investment funds, vehicles, or accounts. Carried interest and incentive fees could be significantly
reduced as a result of our inability to maximize the value of investments by an investment fund during the liquidation process or
in the event of the triggering of a “giveback” obligation. Finally, the applicable investment funds, vehicles, or accounts would
cease to exist after completion of liquidation and winding-up.
In addition, the governing agreements of certain of our investment funds provide that in the event certain “key
persons” in our investment funds do not meet specified time commitments with regard to managing the fund (for example,
certain of the investment professionals serving on the investment committee or advising the fund), then investors in certain
funds have the right to vote to terminate the investment period by a simple majority vote in accordance with specified
procedures, accelerate the withdrawal of their capital on an investor-by-investor basis, or the fund’s investment period will
automatically terminate and the vote of a simple majority of investors is required to restart it. While we believe that our
investment professionals have appropriate incentives to remain in their respective positions, based on equity ownership, profit
participation, and other contractual provisions, we are not able to guarantee the ongoing participation of the management team
members in respect of our funds. In addition to having a significant negative impact on our revenue, earnings, and cash flow,
the occurrence of a key person event with respect to any of our investment funds would likely result in significant reputational
damage to us and could negatively impact our future fundraising efforts.
AlpInvest funds generally provide for automatic suspension of the investment period if there is a key person event with
the vote of a supermajority of investors required to restart it and the right of a simple majority or a supermajority of investors to
remove the general partner with cause and, in some cases, without cause, but generally have not provided for liquidation
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without cause. Where AlpInvest funds include “key person” provisions, they are focused on specific, existing AlpInvest
personnel, as applicable.
Moreover, because our investment funds generally have an adviser that is registered under the Advisers Act, the
management agreements of each of our investment funds would be terminated upon an “assignment” to a third-party of these
agreements without appropriate investor consent, which assignment may be deemed to occur in the event these advisers were to
experience a change of control. We cannot be certain that consents required to assignments of our investment management
agreements will be obtained if a change of control occurs. “Assignment” of these agreements without investor consent could
cause us to lose the fees we earn from such investment funds.
Third-party investors in our investment funds with commitment-based structures may not satisfy their contractual obligation
to fund capital calls when requested by us, which could adversely affect a fund’s operations and performance.
Investors in our carry funds make capital commitments to those funds that we are entitled to call from those investors
at any time during prescribed periods. We depend on investors fulfilling their commitments when we call capital from them in
order for those funds to consummate investments and otherwise pay their obligations (for example, management fees) when
due. Any investor that did not fund a capital call would generally be subject to several possible penalties, including having a
significant amount of its existing investment forfeited in that fund. However, the impact of the penalty is directly correlated to
the amount of capital previously invested by the investor in the fund and if an investor has invested little or no capital, for
instance, early in the life of the fund, then the forfeiture penalty may not be as meaningful. Investors also may negotiate for
lesser or reduced penalties at the outset of the fund, thereby inhibiting our ability to enforce the funding of a capital call. Our
use of subscription lines of credit to purchase an investment prior to calling capital from fund investors could increase the
prevalence of defaulting limited partners. Should the value of an investment funded through a fund line-of-credit decline,
particularly early in a fund’s life cycle where minimal capital has been contributed by the fund’s investors, a limited partner
may decide not to fund its commitment. In addition, third-party investors typically use distributions from prior investments to
meet future capital calls. In cases where valuations of investors’ existing investments fall and the pace of distributions slows,
investors may be unable to make new commitments to third-party managed investment funds such as those advised by us. If
investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, the operation and
performance of those funds could be materially and adversely affected.
In addition, our failure to comply with applicable pay-to-play laws, regulations, and/or policies adopted by a number
of states and municipal pension funds, as well as the New York Attorney General’s Public Pension Fund Reform Code of
Conduct, may, in certain instances, excuse a public pension fund investor from its obligation to make further capital
contributions relating to all or any part of an investment or allow it to withdraw from the fund. If a public pension fund investor
were to seek to be excused from funding a significant amount of capital calls for any particular fund or funds, the operation and
performance of those funds could be materially and adversely affected.
Valuation methodologies for certain assets in our funds can involve subjective judgments, and the fair value of assets
established pursuant to such methodologies may be incorrect, which could result in the misstatement of fund performance
and accrued performance allocations.
There are often no readily ascertainable market prices for a substantial majority of illiquid investments of our
investment funds. We determine the fair value of the investments of each of our investment funds at least quarterly based on the
fair value guidelines set forth by generally accepted accounting principles in the United States (“U.S. GAAP”). The fair value
measurement accounting guidance establishes a hierarchal disclosure framework that ranks the observability of market inputs
used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including
the type of financial instrument, the characteristics specific to the financial instrument, and the state of the marketplace,
including the existence and transparency of transactions between market participants. Financial instruments with readily
available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a
higher degree of market price observability and a lesser degree of judgment applied in determining fair value.
Investments for which market prices are not observable include, but are not limited to, illiquid investments in operating
companies, real estate, energy ventures, infrastructure projects, structured vehicles, and other funds, and encompass all
components of the capital structure, including equity, mezzanine, debt, preferred equity, and derivative instruments such as
options and warrants. Fair values of such investments are determined by reference to the market approach (i.e., multiplying a
key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the
range of comparable public entities or transactions, adjusted by management as appropriate for differences between the
investment and the referenced comparables), the income approach (i.e., discounting projected future cash flows of the investee
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company or asset and/or capitalizing representative stabilized cash flows of the investee company or asset), and other
methodologies such as prices provided by reputable dealers or pricing services, option pricing models, replacement costs, and
estimates of net asset value for fund interests.
The determination of fair value using these methodologies takes into consideration a range of factors including but not
limited to the price at which the investment was acquired, the nature of the investment, local market conditions, the multiples of
comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of
the investment. These valuation methodologies involve a significant degree of subjective management judgment. For example,
as to investments that we share with another sponsor, we may apply a different valuation methodology or factors or derive a
different value than such other sponsor does and/or derive a different value than the other sponsor has derived on the same
investment, which could cause some investors and regulators to question our valuations. In this respect, the SEC continues to
focus on issues related to valuation of private investment vehicles, including consistent application of the methodology,
disclosure, and conflicts of interest, in its enforcement, examination, and rulemaking activities.
Because there is significant uncertainty in the valuation of, or in the stability of the value of, illiquid investments, the
fair values of such investments as reflected in an investment fund’s net asset value do not necessarily reflect the prices that
would be obtained by us on behalf of the investment fund when such investments are realized. Realizations at values
significantly lower than the values at which investments had been reflected in prior fund net asset values would result in
reduced earnings or losses for the applicable fund, and potentially the loss of carried interest and incentive fees. Changes in
values attributed to investments from quarter to quarter may result in volatility in the net asset values and results of operations
that we report from period to period. In addition, a situation where asset values turn out to be materially different than values
reflected in prior fund net asset values could cause investors to lose confidence in us, which could in turn result in difficulty in
raising additional funds.
The due diligence process that we undertake in connection with investments by our investment funds may not reveal all facts
that may be relevant in connection with an investment.
Before making private equity and other investments, we conduct due diligence that we deem reasonable and
appropriate based on the known facts and circumstances applicable to each investment. The objective of the due diligence
process is to identify attractive investment opportunities based on known facts and circumstances and initial risk assessment
surrounding an investment and, depending on our ownership or control of private equity investments, prepare a framework that
may be used from the date of an acquisition to drive operational achievement and value creation. When conducting due
diligence, we may be required to evaluate important and complex business, financial, regulatory, tax, accounting, environmental
(including climate change), social, governance, and legal issues. Outside consultants, legal advisors, accountants, and
investment banks may be involved in the due diligence process to varying degrees depending on the type of investment.
Nevertheless, when conducting due diligence and making an assessment regarding an investment, we rely on the resources
available to us, including information provided by the target of the investment and, in some circumstances, third-party
investigations and analysis. The due diligence process may at times be subjective. Due to intense competition in the
marketplace, we may have less time than in the past to complete our due diligence or our competitors may review less due
diligence thereby increasing the speed with which they complete their review. We cannot be certain that the due diligence
investigation we carry out with respect to any investment opportunity will reveal or highlight all relevant facts that may be
necessary or helpful in evaluating such investment opportunity. In this respect, information and data provided or utilized by
third-party advisors during diligence may be incomplete, inaccurate, or unavailable, and may cause us to incorrectly identify,
prioritize, assess, or analyze or omit to examine in detail the investee entity’s ESG practices and/or related risks and
opportunities.
The due diligence process in connection with carve-out transactions may underestimate the complexity and/or level of
dependence a business has on its parent company and affiliated entities. Given that a carve-out business often does not have
financial statements that accurately reflect its true financial performance as a stand-alone business, due diligence assessments of
such investments can be particularly difficult. Instances of fraud, accounting irregularities and other improper, illegal, or
deceptive practices can be difficult to detect, and fraud and other deceptive practices can be widespread in certain jurisdictions.
Several of our funds invest in emerging market countries that may not have established laws and regulations that are as
stringent as in more developed nations, or where existing laws and regulations may not be consistently enforced. For example,
our funds invest throughout jurisdictions that have material perceptions of corruption according to international rating
standards, such as China, India, Indonesia, Latin America, MENA, and Sub-Saharan Africa. Similarly, our funds invest in
companies in the United States and other jurisdictions and regions with low perceived corruption but whose business may be
conducted in other high-risk jurisdictions.
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Due diligence on investment opportunities in these jurisdictions is frequently more complicated because consistent and
uniform commercial practices in such locations may not be developed or our access to information may be very limited. Fraud,
accounting irregularities, and deceptive practices can be especially difficult to detect in such locations. In addition, investment
opportunities may arise in companies that have historic and/or unresolved regulatory, tax, fraud or accounting related
investigations, audits or inquiries, and/or have been subjected to public accusations of improper behavior. However, even
heightened and specific due diligence and investigations with respect to such matters may not reveal or highlight all relevant
facts that may be necessary or helpful in evaluating such investment opportunity and/or will be able to accurately identify,
assess, and quantify settlements, enforcement actions, and judgments that may arise and which could have a material adverse
effect on the portfolio company’s business, financial condition, and operations, as well as potential significant harm to the
portfolio company’s reputation and prospects. We cannot be certain that our due diligence investigations will result in
investments being successful or that the actual financial performance of an investment will not fall short of the financial
projections we used when evaluating that investment. Failure to identify risks associated with our investments could have a
material adverse effect on our business.
We may be unable to consummate or successfully integrate development opportunities, acquisitions, or joint ventures that
we pursue.
We may, from time to time, seek to engage in selective development or acquisition of asset management businesses or
other businesses complementary to our business where we think we can add substantial value or generate substantial returns.
We may not be able to identify or consummate such opportunities, including due to competition for such opportunities, our
ability to accurately value such opportunities, and the need to negotiate acceptable terms and obtain requisite approvals and
licenses from relevant governmental authorities, for such opportunities. In addition, even if we are able to identify and
successfully complete an acquisition, we may encounter unexpected difficulties or incur unexpected costs associated with
integrating and overseeing the operations of the new businesses.
Dependence on significant leverage in investments by our funds could adversely affect our ability to achieve attractive rates
of return on those investments.
Many of our carry funds’ investments rely heavily on the use of leverage, and our ability to achieve attractive rates of
return on investments will depend on our ability to access sufficient sources of indebtedness at attractive rates. For example, in
many private equity investments, indebtedness may constitute and historically has constituted up to 70% or more of a portfolio
company’s or real estate asset’s total debt and equity capitalization, including debt that may be incurred in connection with the
investment, whether incurred at or above the investment-level entity. The absence of available sources of sufficient debt
financing for extended periods of time could therefore materially and adversely affect our Global Private Equity businesses.
An increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness
would make it more expensive to finance those investments, thereby reducing returns. While increases in interest rates may lead
to higher risk adjusted returns for our Global Credit business, when coupled with restrictions on the deductibility of interest
expense, such increases also may lead to higher default rates and lower valuations of existing assets and cause deployment of
capital to slow, cash flow issues, and/or credit challenges if such interest rates have not otherwise been fixed or hedged.
Increases in interest rates also could make it more difficult to locate and consummate private equity investments because other
potential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher price due
to a lower overall cost of capital or their ability to benefit from a higher amount of cost savings following the acquisition of the
asset. See “Risks Related to our Company—Adverse economic and market conditions and other events or conditions
throughout the world could negatively impact our business in many ways, including by reducing the value or performance of
the investments made by our investment funds and reducing the ability of our investment funds to raise capital, any of which
could materially reduce our revenue, earnings, and cash flow and adversely affect our financial prospects and condition.” In
addition, a portion of the indebtedness used to finance private equity investments often includes leveraged loans and high-yield
and other debt securities issued in the public capital markets and debt instruments privately placed with institutional investors in
the private capital markets. Availability of capital from the leveraged loan, high-yield, and private debt markets is subject to
significant volatility, and there may be times when we might not be able to access those markets at attractive rates, or at all,
when completing an investment. Certain investments also may be financed through borrowings on fund-level debt facilities,
which may or may not be available for a refinancing at the end of their respective terms. Moreover, to the extent there is a
reduction in the availability of financing for extended periods of time, the purchasing power of a prospective buyer may be
more limited, adversely impacting the fair value of our funds’ investments and thereby reducing the acquisition price. Finally,
recent developments in U.S. and international tax policy have significantly limited the availability of income tax deductions for
interest payments on leverage used to finance some of our funds’ investments. Interest deductibility rules continue to evolve,
and further restrictions and changes are anticipated in the U.S. and other jurisdictions. See “Risks Related to Taxation—
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Changes in relevant tax laws, regulations, or treaties or an adverse interpretation of these items by tax authorities could
negatively impact our effective tax rate, tax liability, and/or the performance of certain funds should unexpected taxes be
assessed to portfolio investments (companies) or fund income.” Such restrictions could reduce the after-tax rates of return on
the affected investments, which may have an adverse impact on our business and financial results.
Investments in highly leveraged entities also are inherently more sensitive to declines in revenue, increases in expenses
and interest rates, and adverse economic, market, and industry developments. Moreover, the incurrence of a significant amount
of indebtedness by an entity could, among other things:
•subject the entity to a number of restrictive covenants, terms, and conditions, any violation of which could be
viewed by creditors as an event of default and could materially impact our ability to realize value from the
investment;
•allow even moderate reductions in operating cash flow to render the entity unable to service its indebtedness,
leading to a bankruptcy or other reorganization of the entity and a loss of part or all of the equity investment
in it;
•give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit
the entity’s ability to respond to changing industry conditions to the extent additional cash is needed for the
response, to make unplanned but necessary capital expenditures, or to take advantage of growth opportunities;
•limit the entity’s ability to adjust to changing market conditions, thereby placing it at a competitive
disadvantage compared to its competitors that have relatively less debt;
•limit the entity’s ability to engage in strategic acquisitions that might be necessary to generate attractive
returns or further growth; and
•limit the entity’s ability to obtain additional financing or increase the cost of obtaining such financing,
including for capital expenditures, working capital or other general corporate purposes.
As a result, the risk of loss associated with a leveraged entity generally is greater than for companies with
comparatively less debt. Similarly, the leveraged nature of the investments of our real assets funds increases the risk that a
decline in the fair value of the underlying real estate or tangible assets will result in their abandonment or foreclosure.
When our Global Private Equity funds’ portfolio investments reach the point when debt incurred to finance those
investments matures in significant amounts and must either be repaid or refinanced, those investments may suffer materially if
they have not generated sufficient cash flow to repay maturing debt and there is insufficient capacity and availability in the
financing markets to permit them to refinance maturing debt on satisfactory terms, or at all. If a limited availability of financing
for such purposes were to persist for an extended period of time, when significant amounts of the debt incurred to finance our
Global Private Equity funds’ portfolio investments came due, these funds could be materially and adversely affected.
Many of our Global Credit funds may choose to use leverage as part of their respective investment programs and
regularly borrow a substantial amount of their capital. The use of leverage poses a significant degree of risk and enhances the
possibility of a significant loss in the value of the investment portfolio. A fund may borrow money from time to time to
purchase or carry securities or may enter into derivative transactions (such as total return swaps) with counterparties that have
embedded leverage. The interest expense and other costs incurred in connection with such borrowing may not be recovered by
appreciation in the securities purchased or carried and will be lost, and the timing and magnitude of such losses may be
accelerated or exacerbated, in the event of a decline in the market value of such securities. Gains realized with borrowed funds
may cause the fund’s net asset value to increase at a faster rate than would be the case without borrowings. However, if
investment results fail to cover the cost of borrowings, the fund’s net asset value could also decrease faster than if there had
been no borrowings. Increases in interest rates also could decrease the value of fixed-rate debt investment that our investment
funds make. In addition, to the extent that any changes in tax law make debt financing less attractive to certain categories of
borrowers, this could adversely affect the investment opportunities for our credit-focused funds.
Any of the foregoing circumstances could have a material adverse effect on our results of operations, financial
condition, and cash flow.
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High interest rates and challenging debt market conditions have negatively impacted and could continue to negatively
impact the values of certain assets or investments and the ability of our funds and their portfolio companies to access the
capital markets, which could adversely affect investment and realization opportunities, lead to lower-yielding investments,
and potentially decrease our net income.
In 2022 and 2023, in light of increasing inflation, the U.S. Federal Reserve increased interest rates eleven times. Since
September 2024, the Federal Reserve has reduced the policy rate by 100 basis points as of December 31, 2024. However,
market participants remain uncertain about how long interest rates will stay near current levels. Base interest rates may not
decline as much as anticipated or could even increase again if inflation reaccelerates. Credit spreads, which currently sit near
historic lows, could widen and thus increase the all-in financing rate even with reduced policy rates. Rising interest rates create
downward pressure on the price of real estate and the value of fixed-rate debt investments made by our funds. In addition, our
funds have faced, and could continue to face, difficulty in realizing value from investments due to sustained challenges in the
exit environment as a result of wide bid-ask spreads driven by uncertainty around future levels of interest rates. Finally, shifts in
interest rate trajectories that do not align with existing market expectations may subsequently spark equity and credit market
volatility that negatively affects portfolio company, asset, and fund-level performance.
An increase in interest rates has and could continue to increase the cost of debt financing for the transactions our funds
pursue. In addition, a significant contraction or weakening in the market for debt financing or other adverse change relating to
the terms of debt financing (such as, for example, higher equity requirements and/or more restrictive covenants), particularly in
the area of acquisition financings for private equity and real estate transactions, could have a material adverse effect on our
business. For example, a portion of the indebtedness used to finance certain fund investments often includes high-yield debt
securities issued in the capital markets. Availability of capital from the high-yield debt markets is subject to significant
volatility, and there may be times when we might not be able to access those markets at attractive rates, or at all, when
completing an investment. Moreover, the financing of acquisitions or the operations of our funds’ portfolio companies with
debt may become less attractive due to limitations on the deductibility of corporate interest expense. See “Risks Related to
Taxation—Changes in relevant tax laws, regulations, or treaties or an adverse interpretation of these items by tax authorities
could negatively impact our effective tax rate, tax liability, and/or the performance of certain funds should unexpected taxes be
assessed to portfolio investments (companies) or fund income.”
If our funds are unable to obtain committed debt financing for potential acquisitions, can only obtain debt financing at
an increased interest rate or on unfavorable terms or the ability to deduct corporate interest expense is substantially limited, our
funds may face increased competition from strategic buyers of assets who may have an overall lower cost of capital or the
ability to benefit from a higher amount of cost savings following an acquisition, or may have difficulty completing otherwise
profitable acquisitions or may generate profits that are lower than would otherwise be the case, each of which could lead to a
decrease in our funds’ performance and therefore our revenues. In addition, rising interest rates, coupled with periods of
significant equity and credit market volatility, may potentially make it more difficult for us to find attractive opportunities for
our funds to exit and realize value from their existing investments.
Our funds’ portfolio companies also regularly utilize the corporate debt markets to obtain financing for their
operations. To the extent monetary policy, tax, or other regulatory changes or difficult credit markets render such financing
difficult to obtain, more expensive, or otherwise less attractive, this may also negatively impact the financial results of those
portfolio companies and, therefore, the investment returns on our funds. In addition, to the extent that market conditions and/or
tax or other regulatory changes make it difficult or impossible to refinance debt that is maturing in the near term, some of our
funds’ portfolio companies may be unable to repay such debt at maturity and may be forced to sell assets, undergo a
recapitalization, or seek bankruptcy protection.
Our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a
considerable period of time or lose some or all of our principal investments.
Many of our investment funds invest in securities that are not publicly traded. In many of those cases, our investment
funds may be prohibited by contract or by applicable securities laws from selling such securities for a period of time. Our
investment funds will generally not be able to sell these securities publicly unless their sale is registered under applicable
securities laws, or unless an exemption from such registration is available. The ability of many of our investment funds,
particularly our private equity funds, to dispose of investments is heavily dependent on the public equity markets. For example,
the ability to realize any value from an investment may depend upon the ability to complete an initial public offering of the
portfolio company in which such investment is held. Even if the securities are publicly traded, large holdings of securities can
often be disposed of only over a substantial length of time, exposing the investment returns to risks of downward movement in
market prices during the intended disposition period. In addition, because the investment strategy of many of our funds,
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particularly our private equity and real estate funds, often entails our having representation on our funds’ public portfolio
company boards, our funds may be restricted in their ability to effect such sales during certain periods of time. Accordingly,
under certain conditions, our investment funds may be forced to either sell securities at lower prices than they had expected to
realize or defer, potentially for a considerable period of time, sales that they had planned to make.
We have made and expect to continue to make significant principal investments in our current and future investment
funds. Contributing capital to these investment funds is risky, and we may lose some or the entire principal amount of our
investments.
Our investment funds make investments in companies that we do not control.
Investments by many of our investment funds will include debt instruments and equity securities of companies that we
do not control. Such instruments and securities may be acquired by our investment funds through trading activities or through
purchases of securities from the issuer. In addition, our funds may acquire minority equity interests in large transactions, which
may be structured as “consortium transactions” due to the size of the investment and the amount of capital required to be
invested. A consortium transaction involves an equity investment in which two or more private equity or other firms serve
together or collectively as equity sponsors. We have participated in several consortium transactions due to the increased size of
many of the transactions in which we are involved and may continue to do so in the future. Consortium transactions generally
entail a reduced level of control by our firm over the investment, because governance rights must be shared with the other
consortium sponsors. Accordingly, we may not be able to control decisions relating to a consortium investment, including
decisions relating to the management and operation of the company and the timing and nature of any exit. Our funds may also
dispose of a portion of their majority equity investments in portfolio companies over time in a manner that results in the funds
retaining a minority investment. Those investments may be subject to the risk that the company in which the investment is
made may make business, tax, legal, financial, or management decisions with which we do not agree or that the majority
stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve our interests. If
any of the foregoing were to occur, the value of investments by our funds could decrease and our financial condition, results of
operations, and cash flow could suffer as a result.
Our investment funds may invest in assets denominated in currencies that differ from the currency in which the fund is
denominated.
When our investment funds invest in assets denominated in currencies that differ from the functional currency of the
relevant fund, fluctuations in currency rates could impact the performance of such investment funds. For example, Carlyle
sponsors U.S. dollar-denominated funds that invest in assets denominated in foreign currencies such as our buyout and growth
funds in Asia. In the event that the U.S. dollar appreciates, the market value of the investments in these funds will decline even
if the underlying investments perform well in local currency. In addition, our buyout and growth funds in Europe and certain
AlpInvest funds are Euro-denominated and may have investments denominated in U.S. dollar, British pound, or other
currencies. In the event the Euro appreciates, the market value of investments in these funds would decline even if the
underlying investments perform well in local currency.
We may employ hedging techniques to manage these risks, but we can offer no assurance that such strategies will be
effective or tax efficient. If we engage in hedging transactions, we may be exposed to additional risks associated with such
transactions. See “Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Risk management
activities may adversely affect the return on our and our funds’ investments” and “Risks Related to Regulation and Litigation—
Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of
increased regulatory focus could result in additional burdens and expenses on our business.”
Our funds make investments in companies that are based outside of the United States, which may expose us to additional
risks not typically associated with investing in companies that are based in the United States.
Many of our investment funds invest a significant portion of their assets in the equity, debt, loans, or other securities of
issuers that are headquartered outside of the United States. International investments have increased and we expect will
continue to increase as a proportion of certain of our funds’ portfolios in the future. Investments in non-U.S. securities involve
certain factors not typically associated with investing in U.S. securities, including risks relating to:
•certain economic and political risks, including potential exchange control regulations and restrictions on our
non-U.S. investments and repatriation of profits on investments or of capital invested, the risks of war,
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terrorist attacks, political, economic, or social instability, the possibility of expropriation or confiscatory
taxation, and adverse economic and political developments;
•the imposition of non-U.S. taxes on gains from the sale of investments or other distributions by our funds;
•the absence of uniform accounting, auditing, and financial reporting standards, practices, and disclosure
requirements and less government supervision and regulation;
•changes in laws or clarifications to existing laws that could impact our tax treaty positions, which could
adversely impact the returns on our investments;
•limitations on the deductibility of interest for income tax purposes in certain jurisdictions;
•differences in the legal and regulatory environment or enhanced legal and regulatory compliance;
•limitations on borrowings to be used to fund acquisitions or dividends;
•political hostility to investments by foreign or private equity investors, including increased risk of government
expropriation;
•less liquid markets;
•reliance on a more limited number of commodity inputs, service providers, and/or distribution mechanisms;
•adverse fluctuations in currency exchange rates and costs associated with conversion of investment principal
and income from one currency into another;
•more volatile or challenging market or economic conditions, including higher rates of inflation;
•higher transaction costs;
•less government supervision of exchanges, brokers, and issuers;
•less developed bankruptcy, limited liability company, corporate, partnership, and other laws (which may have
the effect of disregarding or otherwise circumventing the limited liability structures potentially causing the
actions or liabilities of one fund or a portfolio company to adversely impact us or an unrelated fund or
portfolio company);
•difficulty in enforcing contractual obligations (including, for example, purchase agreements and insurance
policies);
•less stringent requirements relating to fiduciary duties;
•fewer investor protections and less publicly available information about companies in certain non-U.S.
markets; and
•greater price volatility.
In addition, investments in companies that are based outside of the United States may be negatively impacted by
restrictions on international trade or the recent or potential imposition of tariffs. See “Risks Related to Our Business Operations
—Risks Related to the Assets We Manage—Trade negotiations and related government actions may create regulatory
uncertainty for our funds’ portfolio companies and our investment strategies and adversely affect the profitability of our funds’
portfolio companies.”
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Our equity investments and some of our debt investments rank junior to investments made by others, exposing us to greater
risk of losing our investment.
In many cases, the companies in which we or our funds invest have, or are permitted to have, outstanding indebtedness
or equity securities that rank senior to our or our fund’s investment. By their terms, such instruments may provide that their
holders are entitled to receive payments of distributions, interest, or principal on or before the dates on which payments are to
be made in respect of our or our fund’s investment. In the event of insolvency, liquidation, dissolution, reorganization, or
bankruptcy of a company in which an investment is made, holders of securities ranking senior to our investment would
typically be entitled to receive payment in full before distributions could be made in respect of our investment. In addition, debt
investments made by us or our funds in our portfolio companies may be equitably subordinated to the debt investments made by
third parties in our portfolio companies. After repaying senior security holders, the company may not have any remaining assets
to use for repaying amounts owed in respect of our investment. To the extent that any assets remain, holders of claims that rank
equally with our investment would be entitled to share on an equal and ratable basis in distributions that are made out of those
assets. Moreover, during periods of financial distress or following insolvency, the ability of us or our funds to influence a
company’s affairs and to take actions to protect an investment will likely be substantially less than that of the senior creditors.
Certain of our fund investments may be concentrated in particular asset types or geographic regions, which could
exacerbate any negative performance of those funds to the extent those concentrated investments perform poorly.
The governing agreements of our investment funds contain only limited investment restrictions and only limited
requirements as to diversification of fund investments, either by geographic region or asset type. For example, we advise funds
that invest predominantly in the United States, Europe, Asia, and Japan, and we advise funds that invest in a single industry
sector, such as financial services, aviation, and power. During periods of difficult market conditions, slowdowns, or increased
borrower defaults in those sectors or geographic regions, decreased revenue, difficulty in obtaining access to financing, and
increased funding costs experienced by our funds may be exacerbated by this concentration of investments, which could result
in lower investment returns for our funds. Such concentration may increase the risk that events affecting a specific geographic
region or asset type could have an adverse or disparate impact on such investment funds, as compared to funds that invest more
broadly. Idiosyncratic factors impacting specific companies or securities can materially affect fund performance depending on
the size of the position.
Certain of our investment funds may invest in securities of companies that are experiencing significant financial or business
difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Such
investments may be subject to a greater risk of poor performance or loss.
Certain of our investment funds, especially our distressed funds, may invest in business enterprises involved in work-
outs, liquidations, reorganizations, bankruptcies, and similar transactions, and may purchase high risk receivables. An
investment in such business enterprises entails the risk that the transaction in which such business enterprise is involved either
will be unsuccessful, will take considerable time, or will result in a distribution of cash or a new security the value of which will
be less than the purchase price to the fund of the security or other financial instrument in respect of which such distribution is
received. In addition, if an anticipated transaction does not in fact occur, the fund may be required to sell its investment at a
loss. Investments in troubled companies may also be adversely affected by U.S. federal and state laws relating to, among other
things, fraudulent conveyances, voidable preferences, lender liability, and a bankruptcy court’s discretionary power to disallow,
subordinate, or disenfranchise particular claims. Investments in securities and private claims of troubled companies made in
connection with an attempt to influence a restructuring proposal or plan of reorganization in a bankruptcy case may also involve
substantial litigation, which has the potential to adversely impact us or unrelated funds or portfolio companies. Due to the
substantial uncertainty concerning the outcome of transactions involving financially troubled companies, there is a potential risk
of loss by a fund of its entire investment in such company.
In addition, at least one federal circuit court has determined that an investment fund could be liable for ERISA Title IV
pension obligations (including withdrawal liability incurred with respect to union multiemployer plans) of its portfolio
companies, if such fund is a “trade or business” and the fund’s ownership interest in the portfolio company is significant
enough to bring the investment fund within the portfolio company’s “controlled group.” While a number of cases have held that
managing investments is not a “trade or business” for tax purposes, the circuit court in this case concluded the investment fund
could be a “trade or business” for ERISA purposes based on certain factors, including the fund’s level of involvement in the
management of its portfolio companies and the nature of its management fee arrangements. Litigation related to the circuit
court’s decision suggests that additional factors may be relevant for purposes of determining whether an investment fund could
face “controlled group” liability under ERISA, including the structure of the investment and the nature of the fund’s
relationship with other affiliated investors and co-investors in the portfolio company. Moreover, regardless of whether an
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investment fund is determined to be a “trade or business” for purposes of ERISA, a court might hold that one of the fund’s
portfolio companies could become jointly and severally liable for another portfolio company’s unfunded pension liabilities
pursuant to the ERISA “controlled group” rules, depending upon the relevant investment structures and ownership interests as
noted above.
Contingent liabilities could harm fund performance.
We may cause our funds to acquire an investment that is subject to contingent liabilities. Such contingent liabilities
could be unknown to us at the time of acquisition or, if they are known to us, we may not accurately assess or protect against
the risks that they present. Acquired contingent liabilities could therefore result in unforeseen losses for our funds. In addition,
in connection with the disposition of an investment in a portfolio company, a fund may be required to make representations
about the business and financial affairs of such portfolio company typical of those made in connection with the sale of a
business. A fund may also be required to indemnify the purchasers of such investment to the extent that any such
representations are inaccurate. These arrangements may result in the incurrence of contingent liabilities by a fund, even after the
disposition of an investment. Accordingly, the inaccuracy of representations and warranties made by a fund could harm such
fund’s performance.
We are reliant on third-party service providers for certain aspects of our business and are subject to risks in using prime
brokers, custodians, counterparties, administrators, and other agents.
We are reliant on other third-party service providers for certain technology platforms that facilitate the continued
operation of our business, including cloud-based services. We generally have less control over the delivery of such third-party
services and, as a result, may face disruptions to our ability to operate our business as a result of interruptions of such services.
A prolonged global failure of cloud services provided to us could result in cascading systems failures. In addition, we may not
be able to adapt our information systems and technology to accommodate our growth, or the cost of maintaining such systems
may increase materially from its current level, which could have a material adverse effect on us.
Many of our funds depend on the services of prime brokers, custodians, counterparties, administrators, and other
agents, including to carry out certain securities and derivatives transactions. The terms of these contracts are often customized
and complex, and many of these arrangements occur in markets or relate to products that are subject to limited or no regulatory
oversight. Some of our funds utilize prime brokerage arrangements with a relatively limited number of counterparties, which
has the effect of concentrating the transaction volume (and related counterparty default risk) of these funds with these
counterparties. Our funds are subject to the risk that the counterparty to one or more of these contracts defaults, either
voluntarily or involuntarily, on its performance under the contract. Any such default may occur suddenly and without notice to
us. Moreover, if a counterparty defaults, we may be unable to take action to cover our exposure, either because we lack
contractual recourse or because market conditions make it difficult to take effective action. This inability could occur in times
of market stress, which is when defaults are most likely to occur.
In addition, our risk management process may not accurately anticipate the impact of market stress or counterparty
financial condition and, as a result, we may not have taken sufficient action to reduce our risks effectively. Default risk may
arise from events or circumstances that are difficult to detect, foresee, or evaluate. Moreover, concerns about, or a default by,
one large participant could lead to significant liquidity problems for other participants, which may in turn expose us to
significant losses. Although we have risk management processes to ensure that we are not exposed to a single counterparty for
significant periods of time, given the large number and size of our funds, we often have large positions with a single
counterparty. For example, most of our funds have credit lines. If the lender under one or more of those credit lines were to
become insolvent, we may have difficulty replacing the credit line and one or more of our funds may face liquidity problems.
In the event of a counterparty default, particularly a default by a major investment bank or a default by a counterparty
to a significant number of our contracts, one or more of our funds may have outstanding trades that they cannot settle or are
delayed in settling. As a result, these funds could incur material losses and the resulting market impact of a major counterparty
default could harm our businesses, results of operation, and financial condition. In addition, under certain local clearing and
settlement regimes in Europe, we or our funds could be subject to settlement discipline fines. See “Risks Related to Our
Business Operations—Risks Related to the Assets We Manage—Our funds make investments in companies that are based
outside of the United States, which may expose us to additional risks not typically associated with investing in companies that
are based in the United States.”
In the event of the insolvency of a prime broker, custodian, counterparty, or any other party that is holding assets of
our funds as collateral, our funds might not be able to recover equivalent assets in full as they will rank among the prime
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broker’s, custodian’s, or counterparty’s unsecured creditors in relation to the assets held as collateral. In addition, our funds’
cash held with a prime broker, custodian, or counterparty generally will not be segregated from the prime broker’s, custodian’s,
or counterparty’s own cash, and our funds may therefore rank as unsecured creditors in relation thereto. If our derivatives
transactions are cleared through a derivatives clearing organization, the CFTC has issued final rules regulating the segregation
and protection of collateral posted by customers of cleared and uncleared swaps. The CFTC is also working to provide new
guidance regarding prime broker arrangements and intermediation generally with regard to trading on swap execution facilities.
The counterparty risks that we face have increased in complexity and magnitude over time. For example, in certain
areas the number of counterparties we face has increased and may continue to increase, which may result in increased
complexity and monitoring costs. Conversely, in certain other areas, the consolidation and elimination of counterparties has
increased our concentration of counterparty risk and decreased the universe of potential counterparties, and our funds are
generally not restricted from dealing with any particular counterparty or from concentrating any or all of their transactions with
one counterparty. In addition, counterparties have in the past and may in the future react to market volatility by tightening
underwriting standards and increasing margin requirements for all categories of financing, which may decrease the overall
amount of leverage available and increase the costs of borrowing.
Our investments are subject to a number of inherent and significant risks.
Our results are highly dependent on our continued ability to generate attractive returns from our investments.
Investments made by our business segments involve a number of significant risks, including the following:
•we advise funds that invest in businesses that operate in a variety of industries that are subject to extensive
domestic and foreign regulation, such as the telecommunications industry, the aerospace, defense and
government services industry, the life sciences industry, and the healthcare industry (including companies that
supply equipment and services to governmental agencies), that may involve greater risk due to rapidly
changing market and governmental conditions in those sectors;
•significant failures of our investments to comply with laws and regulations applicable to them may expose us
to liabilities, fines, or penalties, could affect the ability of our funds to invest in other companies in certain
industries in the future, and could harm our reputation;
•companies in which investments are made may have limited financial resources and may be unable to meet
their obligations, which may be accompanied by a deterioration in the value of their equity securities or any
collateral or guarantees provided with respect to their debt;
•companies or assets in which investments are made are more likely to depend on the management talents and
efforts of a small group of persons and, as a result, the death, disability, resignation, or termination of one or
more of those persons could have a material adverse impact on their business and prospects and the
investment made;
•companies in which investments are made may be businesses or divisions acquired from larger operating
entities that may require a rebuilding or replacement of financial reporting, information technology,
operations, and other areas;
•companies or assets in which investments are made may from time to time be parties to litigation, may be
engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may
require substantial additional capital to support their operations, finance expansion, or maintain their
competitive position;
•instances of fraud, corruption, and other deceptive practices committed by senior management of portfolio
companies in which our funds invest may undermine our due diligence efforts with respect to such companies
and, upon the discovery of such fraud, negatively affect the valuation of a fund’s investments as well as
contribute to overall market volatility that can negatively impact a fund’s investment program;
•our funds may make investments that they do not advantageously dispose of prior to the date the applicable
fund is dissolved, either by expiration of such fund’s term or otherwise, resulting in a lower than expected
return on the investments and, potentially, on the fund itself;
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•our funds generally establish the capital structure of portfolio companies on the basis of the financial
projections based primarily on management judgments and assumptions, and general economic conditions
and other factors may cause actual performance to fall short of these financial projections, which could cause
a substantial decrease in the value of our equity holdings in the portfolio company and cause our funds’
performance to fall short of our expectations;
•our transactions involve complex tax structuring that could be challenged or disregarded, which may result in
losing treaty benefits or would otherwise adversely impact our investments; and
•executive officers, directors, and employees of an equity sponsor may be named as defendants in litigation
involving a company or asset in which an investment is made or is being made.
Our private equity funds’ performance, and our performance, has been and may in the future be adversely affected by the
financial performance of our portfolio companies and the industries in which our funds invest.
Our performance and the performance of our private equity funds are significantly impacted by the value of the
companies in which our funds have invested. Our funds invest in companies in many different industries, each of which is
subject to volatility based upon a variety of factors, including economic, market, and geopolitical factors. During recessions,
periods of elevated uncertainty, or phases of challenging economic and market conditions, we experience significant
fluctuations in the fair value of securities held by our funds. Obstacles to growth in the near-term are numerous, such as
geopolitical and domestic political uncertainty, large fiscal deficits, the risk of stickier inflation, unexpected shifts in monetary
and fiscal policy, depressed labor force participation, the risk of labor shortages in the face of more restrictive immigration
policies, high levels of public debt, slowing population growth, supply chain pressures, and economic stress outside the United
States. These factors and other general economic trends may impact the performance of our portfolio companies in many
industries and geographies. In addition, the value of our investments in portfolio companies in the financial services industry is
impacted by the overall health and stability of the credit and equity markets. The U.S. dollar rose 7.1% in 2024 on a broad
trade-weighted basis, with gains concentrated in the post-October timeframe. A very strong U.S. dollar depresses the profits of
domestic companies with significant foreign revenues, increases inflation risk in other economies as the cost of U.S. goods and
services rises in local currency terms, increases default risk on U.S. dollar-denominated loans and bonds issued by businesses
domiciled in emerging market economies (“EMEs”), and exacerbates food and energy crises in EMEs as most commodities are
invoiced in dollars. A sustained period of elevated U.S. dollar value relative to global currencies would perpetuate and worsen
these trends. An increase in emerging market corporate or sovereign defaults could further impair funding conditions or depress
asset prices in these economies.
The performance of our private equity funds, and our performance, may be adversely affected to the extent our fund
portfolio companies experience adverse performance or additional pressure due to exogenous factors, such as the Russian
invasion of Ukraine and another pandemic or global health crisis like the COVID-19 pandemic. For example, during 2022, we
recorded an impairment charge of $4.0 million on certain acquired contractual rights related to Carlyle Aviation Partners as a
result of impaired income streams from aircraft under lease in Russia. In addition, the performance of our investment funds and
our portfolio companies may be adversely affected by increases in inflationary pressures such as employee wage growth or
rising input costs, which could compress profit margins, particularly at our portfolio companies that are unable to effectively
increase prices in response. Rapid and unforeseen technological transformation, such as the recent emergence of large language
models and generative AI, may introduce the risk of obsolescence to portfolio companies and negatively affect their
performance. With respect to real estate, various factors could have an adverse effect on investment performance, including,
among others, deflation in consumer prices, a low level of consumer confidence in the economy, and/or the residential real
estate market and rising mortgage interest rates. In response to financial difficulties that are currently being experienced or that
may be experienced in the future by certain portfolio companies or real estate investments, we may consider legal, regulatory,
tax, or other factors in determining the steps we may take to support such companies or investments, which may include
enhancing the management team or funding additional capital investments from our investment funds, our senior Carlyle
professionals, and/or us. The actions we may take to support companies or investments experiencing financial difficulties may
not be successful in remedying the financial difficulties and our investment funds, our senior Carlyle professionals, or we may
not recoup some or all of any capital investments made in support of such companies or investments.
Our CLO business and investment into CLOs involves certain risks.
CLOs may present risks similar to other types of debt obligations and, in fact, such risks may be of greater significance
in the case of CLOs. In this respect, CLOs invest on a leveraged basis in loans or securities that are themselves highly leveraged
investments in the underlying collateral, which increases both the opportunity for higher returns as well as the magnitude of
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losses compared to unlevered investments. As a result of such funds’ leverage position, CLOs and their investors are at risk of
suffering losses. For example, investments in structured vehicles, including equity and debt securities issued by CLOs, involve
risks such as liquidity risk, credit risk, and market risk. Changes in interest rates and credit quality may cause short-term price
fluctuations, increase in credit spreads, decline in ratings, or longer-term impairment. In addition, a reduction in the liquidity of
the credit markets may result in an increase in credit spreads and a decline in ratings, performance, and market values for
leveraged loans. We have significant exposure to these markets through our investment in our CLO funds.
In addition to the general risks associated with investing in debt and equity securities, CLO securities carry additional
risks, including, but not limited to, the possibility that distributions from collateral assets will be inadequate to make interest,
management fee, or other payments to Carlyle in its capacity as equity holder or manager, respectively, and the quality of the
collateral may decline in value, default, or be downgraded. Moreover, changes in the collateral held by a CLO may cause
payments on the instruments we hold to be reduced, either temporarily or permanently. Non-payment could result in a reduction
of our income and revenues. CLO securities may be less liquid than other types of securities and are often more volatile than the
individual assets that make-up the CLOs. In addition, CLOs and other structured finance securities may be subject to
prepayment risk. Further, the performance of a CLO or other structured finance security is generally affected by a variety of
factors, including the security’s priority in the capital structure of the issuer thereof, the availability of any credit enhancement,
the level and timing of payments and recoveries on and the characteristics of the underlying receivables, loans, or other assets
that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize
upon any related collateral, and the capability of the servicer of the securitized assets. There are also risks that the trustee of a
CLO does not properly carry out its duties to the CLO, potentially resulting in loss to the CLO. Moreover, the complex
structure of the security may produce unexpected investment results, especially during times of market stress or volatility.
Investments in structured finance securities may also be subject to liquidity risk.
During 2024, we earned over $200 million in management fees from our CLOs, prior to the effects of consolidation, of
which nearly 65% are in the form of subordinated fees. The subordinated fees we generate from our CLO business could be
negatively impacted if one or more CLOs fail certain tests related to overcollateralization (including the interest diversion test)
set forth in their respective indentures. In the event that worsening credit conditions and/or a deterioration in loan performance
generally leads to defaults or downgrades of the CLOs’ underlying collateral obligations, one or more CLOs could fail one or
more overcollateralization tests and/or interest diversion tests. These risks are correlated, as when an underlying collateral
obligation defaults or is downgraded below a certain threshold, such collateral obligation is then carried below par for the
purpose of overcollateralization and interest diversion testing, making a failure of any such test more likely to occur. Any such
failure would result in funds otherwise available to pay the management fees we earn on such investment vehicle to instead be
used to either pay down the principal on the securities issued by such vehicle in an amount necessary to cause such tests to pass
or purchase sufficient collateral in an amount necessary to cause such CLO to pass such tests. If either of these scenarios
occurred, there is the potential that the remaining funds would be insufficient to pay expected management fees on any such
CLO, which would result in either a temporary deferral or permanent loss of such management fees.
Underwriting, syndicating, and securities placement activities expose us to risks.
TCG Capital Markets may act as an underwriter, syndicator, or placement agent for security offerings and TCG
Senior Funding L.L.C. may act as an underwriter, originator, syndicator, or placement agent in loan originations. If we are
unable to sell securities or place loans at the anticipated price levels where we act as an underwriter, syndicator, or placement
agent, we may incur losses and suffer reputational harm.
As an underwriter, syndicator, or placement agent, we also may be subject to potential liability for material
misstatements or omissions in prospectuses and other offering documents relating to offerings we underwrite, syndicate, or
place. In certain situations, we may have liabilities arising from transactions in which our investment fund may participate as a
purchase or a seller of securities, which could constitute a conflict of interest or subject us to damages or reputational harm.
Our Global Investment Solutions business is subject to additional risks.
Our Global Investment Solutions business is subject to additional risks, including the following:
•The Global Investment Solutions business is subject to business and other risks and uncertainties generally
consistent with our business as a whole, including legal, tax, and regulatory risks; the avoidance or
management of conflicts of interest; the ability to attract and retain investment professionals and other
personnel; and risks associated with the acquisition of new investment platforms.
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•Pursuant to our current arrangements with the various businesses, we restrict our participation in the
investment activities undertaken by our Global Investment Solutions segment (including with respect to
AlpInvest), which may in turn limit our ability to address risks arising from their investment activities. For
example, although we maintain ultimate control over AlpInvest, its management team (who are our
employees) continues to exercise independent investment authority without involvement by other Carlyle
personnel. For so long as these arrangements are in place, we will observe substantial restrictions on our
ability to access investment information or engage in day-to-day participation in the AlpInvest investment
businesses, including a restriction that AlpInvest investment decisions are made and maintained without
involvement by other Carlyle personnel and that no specific investment data, other than data on the
investment performance of its investment funds and managed accounts, will be shared. Generally, we have a
reduced ability to identify or respond to investment and other operational issues that may arise within the
Global Investment Solutions business, relative to other Carlyle investment funds.
•Similar to other parts of our business, Global Investment Solutions is seeking to broaden its investor base by
raising funds and advising separate accounts for investors on an account-by-account basis and the number and
complexity of such investor mandates and fund structures has increased as a result of continuing fundraising
efforts, and the activation of mandates with existing investors.
•Conflicts may arise between such Global Investment Solutions funds or separate managed accounts (e.g.,
competition for investment opportunities), and in some cases conflicts may arise between a Global Investment
Solutions fund or managed account and a Carlyle fund. In addition, certain managed accounts may have
different or heightened standards of care, and if they invest in other investment funds sponsored by us could
result in lower management fees and carried interest to us than Carlyle’s typical investment funds.
•Our Global Investment Solutions business is separated from the rest of the firm by an informational wall
designed to prevent certain types of information from flowing from the Global Investment Solutions platform
to the rest of the firm. This information barrier limits the collaboration between our investment professionals
with respect to specific investments.
Industry Risks Related to the Assets We Manage
Our real estate funds are subject to risks inherent in the ownership and operation of real estate and the construction and
development of real estate.
Investments in our real estate funds are subject to the risks inherent in the ownership and operation of real estate and
real estate-related businesses and assets. These risks include the following:
•those associated with the burdens of ownership of real property;
•general and local economic conditions;
•changes in supply of and demand for competing properties in an area (as a result, for instance, of
overbuilding);
•changes in interest rates and related increases in borrowing costs;
•fluctuations in the average occupancy and room rates for hotel and student housing properties;
•changes in demand for commercial office properties (including as a result of an increased prevalence of
remote work);
•population and demographic shifts;
•the financial resources of tenants;
•defaults by borrowers or tenants;
•changes in building, environmental, zoning, and other laws;
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•restrictive covenants, encumbrances, and other land or use restrictions;
•failure to obtain necessary approvals and/or permits;
•energy and supply shortages;
•casualty or condemnation losses;
•various uninsured or uninsurable risks;
•natural disasters, including increased physical risks from climate change such as event-driven exposures
resulting from the increased severity of extreme weather events, such as cyclones, hurricanes, wildfires, or
floods, and consequences of longer-term shifts in climate patterns, for example, sustained higher temperatures
that may cause sea levels to rise or chronic heat waves, and the effects of climate change on supply and
demand;
•changes in government statutes, regulations, or regulatory action or regulatory interpretation at the federal,
state, or local level (such as vacancy control, rent control, pricing software or practices, and climate change);
•changes in the way real estate is occupied as a result of pandemics or other unforeseen events;
•changes in real property tax rates and operating expenses;
•the reduced availability of mortgage funds or other forms of financings, including construction financing,
which may render the sale or refinancing of properties difficult or impracticable;
•inability to meet debt obligations;
•breaches by third parties of their contractual obligations, including ground lessors, ground lessees, landlords,
and tenants;
•claims by third parties, including adjacent landowners, and homeowners’ associations;
•negative developments in the economy that depress travel and leasing activity or rents;
•environmental liabilities;
•contingent liabilities on disposition of assets;
•increase in insurance premiums and changes to the insurance market;
•unexpected cost overruns and delays in connection with development projects;
•terrorist attacks, war, and other factors that are beyond our control; and
•dependence on local operating partners.
Our real estate funds’ portfolio investments are subject to various risks that cause fluctuations in occupancy, rental
rates, operating income, and expenses or that render the sale or financing of the funds’ portfolio investment properties difficult
or unattractive, which risks were exacerbated by the COVID-19 pandemic and may be further exacerbated by another pandemic
or global health crisis. For example, following the termination or expiration of a tenant’s lease, there could be a period of time
before a funds’ portfolio investment will begin receiving rental payments under a replacement lease. During that period, the
portfolio investments (and, indirectly, the funds) will continue to bear fixed expenses such as interest, real estate taxes,
maintenance, and other operating expenses. In addition, declining economic conditions could impair the portfolio investments’
ability to attract replacement tenants and achieve rental rates equal to or greater than the rents paid under previous leases.
Increased competition for tenants would require the portfolio investments to make capital improvements to properties that we
would not otherwise have planned. Any unbudgeted capital improvements that a fund undertakes may divert cash that would
otherwise be available for distribution to investors. To the extent that the portfolio investments are unable to renew leases or re-
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let spaces as leases expire, decreased cash flow from tenants will result, which would adversely impact the relevant fund’s
returns. Our real estate funds may also make investments in residential real estate projects and/or otherwise participate in
financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more
highly susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to
the ownership and operation of commercial real estate assets.
With regard to potential environmental liabilities, ownership of real assets in our investment funds or vehicles may
increase our risk of liability under laws that impose, regardless of fault, joint and several liability for the cost of remediating
contamination and compensation for damages. In addition, changes in environmental laws or regulations or the environmental
condition of an investment may create liabilities that did not exist at the time of acquisition. Even in cases where we are
indemnified by a seller against liabilities arising out of violations of environmental laws and regulations, there can be no
assurance as to the financial viability of the seller to satisfy such indemnities or our ability to achieve enforcement of such
indemnities.
In addition to real property assets, our real estate funds may also invest in real estate related operating companies such
as logistics hubs, data centers, marinas, or certain event spaces. These investments are similar to the portfolio investments made
by our buyout and growth funds and are subject to similar risks and uncertainties as apply to those operating companies. See
“Risks Related to Our Business Operations—Risks Related to the Assets We Manage—The investments of our private equity
funds are subject to a number of inherent risks.”
Real estate markets may experience sharp increases in capitalization rates and declines in value as a result of overall
economic decline and the limited availability of financing and the value of certain investments in our real estate funds may
decline significantly. In addition, if our real estate funds acquire direct or indirect interests in undeveloped land or
underdeveloped real property, which may often be non-income producing, they will be subject to the risks normally associated
with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other
regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of
our fund, such as weather or labor conditions or material shortages), and the availability of both construction and permanent
financing on favorable terms. Moreover, our real estate funds’ properties are often managed by a third party, which makes us
dependent upon such third parties and subjects us to risks associated with the actions of such third parties. Any of these factors
may cause the value of the investments in our real estate funds to decline, which may have a material impact on our results of
operations.
In addition, lenders in commercial real estate financing typically require a non-recourse carveout guarantee and
environmental indemnity, which typically provides that the lender can recover losses from guarantors for certain bad acts, such
as fraud or intentional misrepresentation, intentional waste, willful misconduct, criminal acts, misappropriation of funds,
voluntary incurrence of prohibited debt, and environmental losses sustained by the lender. For our acquisitions, non-recourse
carveout guarantees and environmental indemnities may be extended by our funds. We expect that commercial real estate
financing arrangements generally will increasingly continue to require non-recourse carveout guarantees and environmental
indemnities. In addition, lenders may require interest, carry, and/or payment guarantees in connection with a real estate
financing arrangement, which may be provided by the fund. In the event that any such guarantee or indemnity is called, a fund’s
or our assets could be negatively impacted and we or our funds may be subject to liability.
The acquisition, ownership, and disposition of real properties carry certain specific litigation risks. Litigation may be
commenced with respect to a property acquired in relation to events or circumstances relating to periods prior to the acquisition
of such property. In addition, at the time of disposition, other potential buyers may bring claims related to the asset or for due
diligence expenses or other damages. After the sale of a real estate asset, buyers may later sue our funds or us for losses
associated with latent defects or other problems not uncovered in due diligence. Litigation can arise for events or circumstances
that occur or are alleged to occur during the ownership period.
We or our funds may also be subject to certain risks associated with investments and, in particular, real estate-related
assets. Real estate investment trusts (“REITs”) and other types of owners may be affected by changes in the value of their
underlying properties and defaults by borrowers or tenants and, in the case of REITs, changes in tax laws or by a failure to
qualify for tax-free pass through income could impair a REIT’s ability to generate cash flows to make distributions.
Qualification as a REIT also depends on a REIT’s ability to meet various requirements imposed by the U.S. Internal Revenue
Code of 1986, as amended (the “Code”), which relate to organizational structure, annual distributions, diversity of stock
ownership, and certain restrictions with regard to the nature of their assets and the sources of their income. If a REIT fails to
qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax at regular corporate rates, and applicable
state and local taxes, which would reduce the amount of cash available for distribution to its stockholders.
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Investments in real estate debt investments may be unsecured and/or subordinated to a substantial amount of
indebtedness and may not be protected by financial covenants. Non-performing real estate loans may require a substantial
amount of workout negotiations and/or modification, which may entail, among other things, a substantial reduction in the
interest rate and a substantial write-down of the principal of such loan. Investments in commercial mortgage loans are subject to
risks of delinquency, foreclosure, and loss of principal. In the event of any default under a mortgage loan held directly by us or
one of our funds, we or our fund will bear a risk of loss of principal to the extent of any deficiency between the value of the
collateral and the principal and accrued interest of the loan. Investments in distressed assets or businesses may have little or no
near-term cash flow, involve a high degree of risk and, if subject to bankruptcy or insolvency, could be subordinated or
disallowed.
Our energy business is involved in oil and gas investments (i.e, exploration, production, storage, transportation, logistics,
refining, marketing, trading, petrochemicals, energy services, and other opportunistic investments), which entail a high
degree of risk.
Our energy teams focus on investments in businesses involved in oil and gas production, development, and
exploration, which can be a speculative business involving a high degree of risk, including:
•the use of new technologies;
•reliance on estimates of oil and gas reserves in the evaluation of available geological, geophysical,
engineering, and economic data for each reservoir;
•encountering unexpected formations or pressures, premature declines of reservoirs, blow-outs, equipment
failures and other accidents in completing wells and otherwise, cratering, sour gas releases, uncontrollable
flows of oil, natural gas or well fluids, adverse weather conditions, pollution, fires, spills, and other
environmental risks;
•the volatility of oil and natural gas prices and its impact on the demand for oil and gas products and services
(climate change related or otherwise); and
•potential contributions to climate change, as well as regulations and stakeholder scrutiny related to the same.
Oil, gas, and product prices are subject to international supply and demand dynamics and, as a consequence, related
margins can be volatile. In general, political developments, global conflicts such as Russia’s invasion of Ukraine and the war
between Israel and Hamas, see-sawing supply-demand dynamics, technological change, global macroeconomic conditions,
public health risks, and changes in the influence of the Organization of Petroleum Exporting Countries (“OPEC”) may continue
to impact commodity prices going forward and the financial performance of some of our existing and future investments. Our
investments that are exposed to energy prices, either as consumers or producers of energy, and their financial performance has
been, and is likely to continue to be, affected by the continued volatility in energy prices. To the extent that current conditions
persist or worsen, there may be adverse impacts on the financial performance of the affected businesses, on the availability of
financing or credit to them as well as their asset prices and valuations.
Oil prices tend to experience significant volatility in response to macroeconomic trends, trade developments,
geopolitical events, and data on inventories, global demand, future supply, and U.S. dollar strength. Prices for oil and natural
gas are subject to wide fluctuation in response to relatively minor changes in the supply of and demand for oil and natural gas,
as well as numerous additional factors such as market uncertainty, speculation, the level of consumer product demand, the
refining capacity of oil purchasers, weather conditions, domestic and non-U.S. governmental regulations (including with respect
to trade and economic sanctions), appreciation or depreciation of the U.S. dollar, the price and availability of alternative fuels,
political conditions in the Middle East, Africa, and Eastern Europe, actions of the OPEC, the non-U.S. supply of oil and natural
gas, U.S. and global inventories, the price of non-U.S. imports, and overall economic conditions. In addition, changes in
commodity prices can vary widely from one location to the next depending upon the characteristics of the production and the
availability of gathering, transportation, processing, and storage facilities used to transport the oil and gas to markets. In the
event that oil prices decline sharply in the future, or fail to sustain upward price momentum, it is possible our portfolio could be
adversely impacted. In the event that global commodity market dislocations persist and energy prices stay elevated or increase
sharply in the future, it is possible that our portfolio could be adversely impacted by potential changes in the fiscal regimes that
the host countries of our investments apply to energy producers.
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In order to better manage these risks, we seek to help a subset of portfolio companies accelerate progress related to
climate change and the energy transition. For example, we help select companies to measure, monitor, and manage their carbon
emissions, set decarbonization goals and associated pathways, and consider investments in new technologies to build additional
long-term value in these companies, and position them to find opportunities in response to changing market dynamics;
however, there is no guarantee that such efforts will be successful.
Investments in the natural resources industry, including the infrastructure, energy, power, and renewables industries,
involve various operational, construction, and regulatory risks.
Natural Resources. Our natural resources portfolio companies may face construction and operational risks typical for
energy, infrastructure, and power generation infrastructure businesses, including, among other things:
•labor disputes, work stoppages, or shortages of skilled labor;
•shortages of fuels or materials;
•slower than projected construction progress and the unavailability or late delivery of necessary equipment;
•delays caused by or in obtaining the necessary regulatory approvals or permits;
•adverse weather conditions and unexpected construction conditions;
•accidents or the breakdown or failure of equipment or processes;
•difficulties in obtaining suitable or sufficient financing; and
•force majeure or catastrophic events such as explosions, fires, and terrorist activities and other similar events
beyond our control.
Such developments could result in substantial unanticipated delays or expenses and, under certain circumstances,
could prevent completion of construction activities once undertaken. Construction costs may exceed estimates for various
reasons, including inaccurate engineering and planning, labor and building material costs in excess of expectations, and
unanticipated problems with project start-up. Such unexpected increases may result in increased debt service costs and funds
being insufficient to complete construction. Portfolio investments under development or portfolio investments acquired to be
developed may receive little or no cash flow from the date of acquisition through the date of completion of development and
may experience operating deficits after the date of completion. In addition, market conditions may change during the course of
development that make such development less attractive than at the time it was commenced. Any events of this nature could
severely delay or prevent the completion of, or significantly increase the cost of, the construction. There also are risks inherent
in the construction work that may give rise to claims or demands against one of our portfolio companies from time to time.
Delays in the completion of any energy or power project may result in lost revenues or increased expenses, including higher
operation and maintenance costs related to such portfolio company.
Infrastructure. Investment in infrastructure assets involves certain differentiated risks. Project revenues can be affected
by a number of factors. Unanticipated changes in the availability or price of inputs necessary for the operation of infrastructure
assets may adversely affect the overall profitability of the investment or related project. Events outside the control of a portfolio
company, such as political action, governmental regulation (including potential climate change initiatives), demographic
changes, economic growth, increasing fuel prices, government macroeconomic policies, service or product prices, social
stability, competition from other businesses and infrastructure, natural disasters (climate change related or otherwise), changes
in weather patterns, changes in demand for products or services, bankruptcy or financial difficulty of a major customer, and acts
of war or terrorism, could significantly reduce the revenues generated or significantly increase the expense of constructing,
operating, maintaining, or restoring infrastructure facilities. In turn, this may impair a portfolio company’s ability to repay its
debt, make distributions, or even result in termination of an applicable concession or other agreement. Although portfolio
companies may maintain insurance to protect against certain risks, where available on reasonable commercial terms (such as
business interruption insurance that is intended to offset loss of revenues during an operational interruption), such insurance is
subject to customary deductibles and coverage limits and may not be sufficient to recoup all of an investment’s losses.
Moreover, once infrastructure assets of investments become operational, they may face competition from other infrastructure
assets in the vicinity of the assets they operate, the presence of which depends in part on governmental plans and policies, over
which we have no control.
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Infrastructure investments are subject to substantial government regulation and governments have considerable
discretion to implement regulations that could affect the business of infrastructure investing. In many instances, the operation or
acquisition of infrastructure assets involves an ongoing commitment to or from a governmental agency, and the operation of
infrastructure assets often relies on government permits, licenses, concessions, leases, or contracts. The nature of these
obligations and dependencies exposes the owners of infrastructure assets to a higher level of regulatory control than typically
imposed on other businesses, resulting in government entities having significant influence over such owners.
Where a portfolio company holds a concession or lease from the government, the concession or lease may restrict the
portfolio company’s ability to operate the business in a way that maximizes cash flows and profitability. The lease or
concession may also contain clauses more favorable to the government counterparty than a typical commercial contract. For
instance, the lease or concession may enable the government to terminate the lease or concession in certain circumstances
without requiring payment of adequate compensation.
Energy and Power. The development, operation, and maintenance of power generation or infrastructure facilities
involves various operational risks, which can include mechanical and structural failure, accidents, labor issues, or the failure of
technology to perform as anticipated. Events outside our control, such as economic developments, changes in fuel prices or the
price of other feedstocks, governmental policies, demand for energy, and similar events, could materially reduce the revenues
generated or increase the expenses of constructing, operating, maintaining, or restoring power generation businesses. Such
developments could impair a portfolio company’s ability to repay its debt or conduct its operations. We may also choose to or
be required to decommission a power generation facility or other asset. The decommissioning process could be protracted and
result in the incurrence of significant financial and/or regulatory obligations or other uncertainties.
We may acquire equity interests in development projects, including, for example, transmission and power facility
developments and/or in businesses that engage in transmission and power facility development. To the extent that we invest in
such development activities, it will be subject to the risks normally associated with such activities. Such risks include, among
others, risks relating to the availability and timely receipt of zoning and other regulatory approvals, the cost and timely
completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages), and
the availability of both construction and permanent financing on favorable terms. These risks could result in substantial
unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once
undertaken, any of which could have an adverse effect on the financial condition and results of operations.
Investments in electric utility industries both in the United States and abroad continue to experience increasing
competitive pressures, primarily in wholesale markets, as a result of consumer demands, technological advances, greater
availability of natural gas, and other factors. Changes in regulation may support not only consolidation among domestic
utilities, but also the disaggregation of vertically integrated utilities into separate generation, transmission, and distribution
businesses. As a result, additional significant competitors could become active in the independent power industry.
We invest in companies that produce hydrocarbons, the combustion of which releases greenhouse gases linked to
climate change. Governmental and regulatory bodies, investors, consumers, and other stakeholders recently have focused on
combating climate change and a number of jurisdictions have adopted, or are considering the adoption of, regulatory
frameworks to reduce greenhouse gas emissions, although such approach continuing, particularly in the United States, is
uncertain given the new administration and Congress. These include adoption of cap-and-trade regimes, carbon taxes,
restrictive permitting, increased efficiency standards, climate-related reporting, and incentives or mandates for renewable
energy, among others. Compliance with these regulatory requirements could be costly, lengthen project implementation times,
and, together with changes in consumer preferences and technological advances in the alternative energy sector, reduce demand
for hydrocarbons, as well as shift hydrocarbon demand toward relatively lower-carbon sources such as natural gas. Current and
pending greenhouse gas regulations or policies may also increase compliance costs for us and/or our portfolio companies, such
as for monitoring or sequestering emissions, and promote alternatives to hydrocarbons. Companies that produce hydrocarbons
are also increasingly subject to the risk of activism, litigation, and regulatory enforcement related to such companies’
operations, or actual or alleged environmental impacts, as well as increased scrutiny from lenders with regard to sustainability
considerations. Such requirements, as well as social, economic, and technological developments, could have a negative impact
on our ability to obtain suitable or sufficient financing, exit certain of our energy investments, or adversely affect the expected
returns of new investment opportunities.
Investments may not receive the initial regulatory approval or license needed to acquire or otherwise operate an
investment, including after substantial costs have been incurred pursuing such investment. Additional or unanticipated
regulatory approvals, including, for example, renewals, extensions, transfers, assignments, reissuances, or similar actions, may
be required to acquire or operate infrastructure assets, and additional approvals may become applicable in the future due to a
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change in laws and regulations, a change in the portfolio company’s customer(s) or for other reasons. Moreover, permits or
special rulings may be required on taxation, financial, and regulatory related issues. There can be no assurance that a portfolio
company will be able to (i) obtain all required regulatory approvals that it does not yet have or that it may require in the future,
(ii) obtain any necessary modifications to existing regulatory approvals, or (iii) maintain required regulatory approvals. Any
delay in obtaining or failure to obtain and maintain in full force and effect any regulatory approvals, or amendments thereto, or
delay or failure to satisfy any regulatory conditions or other applicable requirements could prevent operation of a facility, sales
to third parties, or could result in additional costs and adversely impact the returns generated by the investment.
Environmental laws, regulations, and regulatory initiatives (including potential climate change initiatives) play a
significant role in the power, infrastructure, and renewable and alternative energy industry and can have a substantial impact on
investments in this industry. A portfolio company’s projects may be subject to changing and increasingly stringent
environmental and health and safety laws, regulations, and permit requirements. For example, global initiatives to minimize
pollution have played a major role in the increase in demand for natural gas and alternative energy sources, creating numerous
new investment opportunities. Conversely, required expenditures for environmental compliance have adversely impacted
investment returns in a number of segments of the industry. The energy and power industry will continue to face considerable
oversight from environmental regulatory authorities and significant influence from non-governmental organizations and special
interest groups. Our investment funds may invest in portfolio companies that are subject to changing and increasingly stringent
environmental and health and safety laws, regulations, and permit requirements.
Renewables. Estimates of factors such as solar energy intensity and movement of wind and water flow (for solar, wind,
and hydroelectric power, respectively) by qualified engineers are often a key factor in valuing certain energy and power
companies. The process of making these estimates is complex, requiring significant decisions and assumptions in the evaluation
of available geological, geophysical, engineering, and economic data. Estimates or projections of market conditions and supply
and demand dynamics are key factors in evaluating potential investment opportunities and valuing the investments and related
assets. The aforementioned estimates are subject to wide variances based on changes in market conditions, underlying
assumptions, and technical or investment-related assumptions.
The operation and financial performance of any renewable energy investment will be significantly dependent on
governmental policies and regulatory frameworks that support renewable energy sources. Investments in renewable energy and
related businesses and/or assets currently enjoy support from national, state, and local governments and regulatory agencies
designed to finance or support the financing development thereof, such as the U.S. federal investment tax credit and federal
production tax credit, U.S. Department of the Treasury grants, various renewable and alternative portfolio standard
requirements enacted by several states, renewable energy credits, and state-level utility programs, such as system benefits
charge and customer choice programs. Similar support, initiatives, and arrangements exist in non-U.S. jurisdictions as well,
such as in the European Union. Non-U.S. jurisdictions may have more variable views on policies regarding renewable energy
(and, for example, may be more willing or likely to abandon initiatives regarding renewable energy in favor of more carbon-
intensive forms of traditional energy generation). The combined effect of these programs is to subsidize in part the
development, ownership, and operation of renewable energy projects, particularly in an environment where the low cost of
fossil fuel may otherwise make the cost of producing energy from renewable sources uneconomic. There can be no assurance
that government support for renewable energy will continue, that favorable legislation will pass, or that the electricity produced
by renewable energy investments will continue to qualify for support through renewable portfolio standards programs. The
elimination of, or reduction in, government policies (including favorable tax policies) that support renewable energy could have
a material adverse effect on a renewable energy portfolio company’s financial condition or results of operation. Conversely,
because policies favoring renewable energy initiatives may involve economic disincentives on more carbon-intensive forms of
traditional energy generation, such policies may adversely affect other investments that do not involve renewable energy
projects.
Climate change and regulatory and other efforts to reduce climate change could adversely affect our business.
We and our funds’ portfolio companies face a number of risks associated with climate change, including both
transition and physical risks. The transition risks that could impact our company and our funds’ investments in portfolio
companies include those risks related to the impact of current and potential U.S. and foreign climate-and ESG-related
legislation and regulation, as well as risks arising from climate-related business trends. In addition, we and our funds’
investments in portfolio companies are subject to risks stemming from the physical impacts of climate change.
New climate change-related regulations or interpretations of existing laws may result in enhanced or conflicting
disclosure obligations that could negatively affect us or our funds’ investments in portfolio companies and also materially
increase our regulatory burden. Increased and/or conflicting applicable or proposed regulations generally increase the costs to
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us, our funds, and our funds’ portfolio companies, and those higher costs may continue to increase if new laws require
additional resources, including spending more time, hiring additional personnel, or investing in new technologies. Moreover,
significant increases in regulatory compliance expenses may negatively impact our funds and their portfolio company
investments. In particular, compliance with climate and other sustainability or ESG-related rules in the European Union and the
United Kingdom is expected to result in increased legal and compliance costs and expenses, which would be borne by us, our
funds, and/or our funds’ portfolio companies. In addition, our funds’ portfolio companies could face transition risk if GHG-
related regulations or taxes are implemented. See “Risks Related to Regulation and Litigation—Regulatory initiatives in
jurisdictions outside the United States could adversely affect our business” and “Increasing scrutiny from stakeholders on
sustainability matters, including our ESG reporting, exposes us to reputational and other risks.”
We also face business trend-related climate risks. Certain fund investors are increasingly taking into account the
consideration for or lack of ESG factors, including climate risks, in determining whether to invest in the funds we manage. In
addition, our reputation and investor relationships could be damaged as a result of our involvement, or our funds’ involvement,
in certain industries, portfolio companies, or transactions associated with activities perceived to be causing or exacerbating
climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations
relating to climate change.
Moreover, significant physical effects of climate change, including extreme weather events, such as hurricanes,
wildfires or floods, can also have an adverse impact on certain of our funds’ investments in portfolio companies and other
investments, particularly real asset and infrastructure investments and portfolio companies that rely on physical factories,
plants, or stores located in affected areas. As the effects of climate change increase, we expect the frequency and impact of
weather and climate related events and conditions to increase as well.
Investments in the insurance industry (including our investment in Fortitude) could be adversely impacted by insurance
regulations and potential regulatory reforms.
Carlyle FRL, L.P., an affiliated investment fund (“Carlyle FRL”), holds a controlling interest in Fortitude, inclusive of
our 10.5% interest. The insurance industry is highly regulated and the regulators in many jurisdictions have broad, and in some
cases discretionary, authority over insurance companies, including, among other things, with respect to marketing practices,
policy rate increases, reserve requirements, capital adequacy, permissible investments, and affiliate transactions. In addition, the
insurance sector is subject to frequent regulatory change. While we intend to invest in companies and acquire businesses that
seek to comply with applicable laws and regulations, the laws and regulations relating to the insurance industry are complex,
may be ambiguous, or may lack clear judicial or regulatory interpretive guidance. Even where laws or regulations purport to be
the same across different jurisdictions, they may be inconsistently applied by the regulators of the different jurisdictions.
In terms of regulatory changes, the following changes in particular may affect the operations and prospects of our
investments in the insurance industry, including Fortitude: (i) changes to interest rates and policies of central banks and
regulatory authorities; (ii) changes in applicable direct or indirect taxes, levies or charges; (iii) changes in government or
regulatory policy that may significantly influence investor decisions in particular markets in which our investments operate; (iv)
changes relating to the capital adequacy framework and rules designed to promote financial stability, both on an individual
reinsurance company level and on a group level; (v) changes to policyholder protections; (vi) changes related to the regulation
of investment management arrangements between insurers and controlling or related asset managers; and (vii) developments in
financial reporting. An adverse review or determination by any applicable judicial or regulatory authority of any such law or
regulation, or an adverse change in applicable regulatory requirements, judicial or regulatory interpretation, or reimbursement
programs, could have a material adverse effect on the operations and/or financial performance of our investments in the
insurance industry (including Fortitude) and may increase their compliance and legal costs. Any such costs could negatively
impact the value of our investments and the returns we are able to generate on such investments. See “Risks Related to our
Company— Adverse economic and market conditions and other events or conditions throughout the world could negatively
impact our business in many ways, including by reducing the value or performance of the investments made by our investment
funds and reducing the ability of our investment funds to raise capital, any of which could materially reduce our revenue,
earnings, and cash flow and adversely affect our financial prospects and condition.”
Insurance regulatory authorities and regulatory organizations continue to scrutinize alternative asset managers’
involvement in the insurance industry, including with respect to the ownership by such managers or their affiliated funds of,
and the management of assets on behalf of, insurance companies. For example, insurance regulators increasingly have focused
on the terms and structure of investment management agreements, including whether they are at arms’ length, establish control
of the insurance company, grant the asset manager excessive authority over the investment strategy of the insurance company,
provide for management fees that are not fair and reasonable, or termination provisions that make it difficult or costly for the
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insurer to terminate the agreement. Regulators also have increasingly focused on the risk profile of certain investments held by
insurance companies (including, without limitation, structured credit assets such as collateralized loan obligations),
appropriateness of investment ratings and potential conflicts of interest (including affiliated investments), and potential
misalignment of incentives and any potential risks from these and other aspects of an insurance company’s relationship with
alternative asset managers that may impact the insurance company’s risk profile. This enhanced scrutiny may increase the risk
of regulatory actions against us and could result in new or amended regulations that limit our ability, or make it more
burdensome or costly, to enter into investment management or advisory agreements with insurance companies and thereby
grow our insurance strategy.
Our relationship with Fortitude may not generate a meaningful contribution to our revenue and our indirect ownership of
Fortitude could give rise to real or apparent conflicts of interest.
While we expect to derive a meaningful contribution to our revenue across our business segments from our investment
in and strategic asset management relationship with Fortitude, as described in Note 4, Investments, to Part II, Item 8
“Investments—Investment in Fortitude,” we may not be successful in doing so. Pursuant to investment management
agreements into which we have entered with Fortitude subsidiaries and certain companies with which they have reinsurance
agreements (the “Ceding Companies”), certain of our subsidiaries receive performance fees and/or management fees from carry
funds and separately managed accounts into which Fortitude Re and the Ceding Companies invest. Through its subsidiaries we
managed or advised $19.4 billion of capital attributable to investments made under these investment management agreements,
as of December 31, 2024. In addition, in April 2022, we entered into a strategic advisory services agreement with certain
subsidiaries of Fortitude through our insurance investment advisor, Carlyle Insurance Solutions Management L.L.C. (“CISM”).
Under the agreement, CISM provides Fortitude with certain services, including business development and growth, transaction
origination and execution, and capital management services in exchange for a recurring management fee based on Fortitude’s
general account assets, which adjusts within an agreed range based on Fortitude’s overall profitability. Such management fee
may decline if there is a corresponding decline in the fair value of the assets we manage and/or the performance of the portfolio.
Our investment management and advisory agreements with Fortitude subsidiaries and the Ceding Companies are
terminable under certain circumstances. If such agreements were terminated, it could have a material adverse effect on our
business, results of operations, and financial condition. There can be no assurance that the benefit we receive from Fortitude
subsidiaries will not decline due to a disruption or decline in Fortitude’s business or a change in our relationship with Fortitude,
including our investment income from our indirect interest in Fortitude and/or investment management or advisory agreements
with Fortitude subsidiaries and the Ceding Companies. We may be unable to replace a decline in the revenue derived from
investments made in our funds and entities by Fortitude Re and/or the Ceding Companies on a timely basis if our relationship
with Fortitude were to change or if Fortitude were to experience a material adverse impact to its business.
Carlyle FRL owns a controlling interest in Fortitude and has the right to appoint a majority of its board of directors.
As a result, there may be real or apparent conflicts of interest with respect to matters affecting the Company, Carlyle-managed
funds, and their portfolio companies and Fortitude, including with respect to the fiduciary duties that our employees that are
board members owe to Fortitude in addition to the duties that they have to the Company. In addition, conflicts of interest could
arise with respect to transactions involving business dealings between the Company, Fortitude, and each of their respective
affiliates. The foregoing conflicts of interest may also arise with respect to subsidiaries of Fortitude.
Our investments in the life sciences industry may expose us to increased risks.
Investments by Abingworth may expose us to increased risks. For example:
•Life sciences and healthcare companies are subject to extensive regulation by the U.S. Food and Drug
Administration, similar foreign regulatory authorities and, to a lesser extent, other federal and state agencies.
These companies are subject to the expense, delay, and uncertainty of the product approval process, and there
can be no guarantee that a particular product candidate will obtain regulatory approval. In addition, the
current regulatory framework may change or additional regulations may arise at any stage during the product
development phase of an investment, which may delay or prevent regulatory approval or impact applicable
exclusivity periods. If a company in which our funds are invested is unable to obtain regulatory approval for a
product candidate, or a product candidate in which our funds are invested does not obtain regulatory approval,
in a timely fashion or at all, the value of our investment would be adversely impacted. Moreover, a clinical
trial (including enrollment therein) or regulatory approval process for pharmaceuticals has and may in the
future be delayed, otherwise hindered, or abandoned as a result of epidemics (including COVID-19), which
could have a negative impact on the ability of the investment to engage in trials or receive approvals, and
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thereby could adversely affect the performance of the investment. In the event such clinical trials do not
comply with the complicated regulatory requirements applicable thereto, such companies may be subject to
regulatory actions.
•Intellectual property often constitutes an important part of a life sciences company’s assets and competitive
strengths, particularly for royalty monetization transactions. To the extent such companies’ intellectual
property positions with respect to products in which Abingworth invests, whether through a royalty
monetization or otherwise, are challenged, invalidated, or circumvented, the value of Abingworth’s
investment may be impaired. The success of a life sciences investment depends in part on the ability of the
biopharmaceutical or medical device companies in whose products Abingworth invests to obtain and defend
patent rights and other intellectual property rights that are important to the commercialization of such
products. The patent positions of such companies can be highly uncertain and often involve complex legal,
scientific, and factual questions.
•The commercial success of products could be compromised if governmental or third-party payers do not
provide coverage and reimbursement, breach, rescind, or modify their contracts or reimbursement policies or
delay payments for such products. In both the United States and foreign markets, the successful sale of a life
sciences company’s product depends on the ability to obtain and maintain adequate coverage and
reimbursement from third-party payers, including government healthcare programs and private insurance
plans. Governments and third-party payers continue to pursue aggressive initiatives to contain costs and
manage drug utilization and are increasingly focused on the effectiveness, benefits, and costs of similar
treatments, which could result in lower reimbursement rates and narrower populations for whom the products
in which Abingworth invests will be reimbursed by payers. For example, in the United States, federal
legislation has passed that modifies coverage, reimbursement, and pricing policies for certain products.
Regulatory agencies have provided guidance on how they intend to implement certain components of the
legislation. In general, as regulatory agencies and others continue to define and implement the legislation,
such legislation may result in lower product prices, altered market dynamics, or the unavailability of adequate
third-party payer reimbursement to enable Abingworth to realize an appropriate return on its investment.
The aviation leasing industry is subject to significant volatility and may expose us to additional risks.
Carlyle Aviation Partners participates in the aircraft leasing industry, which has historically been cyclical in nature for
a number of reasons outside the control of industry participants, including: the demand for aviation travel; geopolitical and
other events, including the war in Ukraine, the Israel-Hamas war and related conflicts, and other wars, civil disturbances, acts of
terrorism, outbreaks of epidemic diseases, including the COVID-19 global pandemic and natural disasters; governmental
regulation, including regulation of trade, such as the imposition of import and export controls, tariffs, and other trade barriers;
weakness in the capital and credit markets and the availability of credit; significant decreases in purchasing power caused by
inflation or otherwise; fluctuations in interest rates whether caused by changes in monetary policy, lack of supply, or other
economic conditions; changing political conditions, including risk of rising protectionism and authoritarian regimes, restrictions
on immigration, or impositions of new trade barriers, including additional economic sanctions or export controls (including
those introduced due to the war in Ukraine); cyber risk, including information hacking, viruses, and malware; operating costs,
availability and price of jet fuel, and general economic conditions affecting aircraft operations; customer restructurings and
bankruptcies and decreases in the creditworthiness of customers; manufacturer production levels and technological innovation;
aircraft and engine models being retired or otherwise made obsolete; the industry ceasing to produce aircraft or engine types;
new-entrant manufacturers producing additional aircraft that compete with existing models; aircraft age and the advent of newer
models of aircraft; airworthiness directives and service bulletins; safety, noise, and emission standards and regulations; and the
availability of spare parts.
A decline in demand for leased aircraft generally, or as a result of the factors described above, may result in decreases
in rental rates, result in lease defaults, and delay or prevent the re-lease or sale of assets on favorable terms.
Risks Related to Our Common Stock
The market price of our common stock may decline due to the large number of shares of common stock eligible for future
sale.
The market price of our common stock may decline as a result of sales of a large number of shares of common stock in
the market in the future or the perception that such sales could occur. These sales, or the possibility that these sales may occur,
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also may make it more difficult for us to sell common stock in the future at a time and at a price that we deem appropriate.
Subject, in some cases, to compliance with our insider trading policy, minimum retained ownership requirements, transfer
restrictions, and limitations applicable to affiliates under Rule 144 under the Securities Act, all of these shares are freely
tradable. In addition, the holders of these shares have the benefit of registration rights agreements with us. Moreover, as holders
of freely tradable common stock rather than Carlyle Holdings units, the Former Private Unitholders are able to more easily sell
shares of common stock into the market (or donate shares of common stock to charities which in turn may sell these into the
market) than was the case before the Conversion. For example, the Former Private Unitholders are not subject to restrictions
that in most cases limited their ability to exchange Holdings Units for common units to prescribed quarterly exchange dates.
This could result in the Former Private Unitholders disposing of their equity interests in us more quickly and/or at a higher
volume than in the past, and the market price of our common stock could decline as a result. Subject to the restrictions
described below, we may issue and sell in the future additional shares of common stock. The issuance of additional equity
securities or securities convertible into equity securities would also result in dilution of our existing shareholders’ equity
interest. The issuance of the additional shares of common stock, the sale of shares of common stock by our significant
shareholders, and the vesting and sale of restricted stock units or the perception that such sales may occur could cause the
market price of our common stock to decline.
As of December 31, 2024, our Chief Executive Officer held a total of 5.2 million unvested restricted stock units
(inclusive of unvested dividend equivalent units that have been credited on such awards) in respect of awards that were granted
to him outside of the Equity Incentive Plan in connection with his hiring. Under our Equity Incentive Plan, we had 17.2 million
unvested restricted stock units outstanding as of December 31, 2024. At our 2024 Annual Meeting of Shareholders, our
shareholders approved an amendment and restatement of the Equity Incentive Plan to increase the shares of common stock
reserved for issuance under the Equity Incentive Plan by an additional 19,000,000 shares. As of December 31, 2024, the total
number of shares of common stock available for grant under the amended and restated Equity Incentive Plan was 30.1 million
and, following the grant of awards in February 2025, the total number of shares of common stock available for grant under the
amended and restated Equity Incentive Plan was 25.7 million. A further increase in the number of shares available for grant
under the Equity Incentive Plan would require shareholder approval, and any such approval would result in more shares that
may be delivered in settlement of vested restricted stock unit awards and that may ultimately be sold in the market, which could
lead to a decline in the market price of our common stock. We have filed several registration statements and intend to file
additional registration statements on Form S-8 under the Securities Act to register shares of common stock or securities
convertible into or exchangeable for common stock issued or available for future grant under our amended and restated Equity
Incentive Plan, when applicable. Any such Form S-8 registration statement will automatically become effective upon filing.
Accordingly, common stock registered under such registration statement will be available for sale in the open market. As
restricted stock unit awards vest and shares of common stock are delivered to restricted stock unit holders, the market price of
our common stock may decline due to dilution or if such holders elect to sell their shares of common stock. Morgan Stanley,
our equity plan service provider, may, from time to time, act as a broker, dealer, or agent for, or otherwise facilitate sales in the
open market through block transactions or otherwise of our common stock on behalf of, plan participants.
The market price and trading volume of our common stock has been and may continue to be volatile, which could cause the
value of your investment to decline.
The market price of our shares may be highly volatile and could be subject to wide fluctuations. In addition, the
trading volume in our shares may fluctuate and cause significant price variations to occur. You may be unable to resell your
shares at or above your purchase price, if at all. Some of the factors that could negatively affect the price of our shares or result
in fluctuations in the price or trading volume of our shares include: variations in our quarterly operating results, which
variations we expect will be substantial, or dividends; our policy of taking a long-term perspective on making investment,
operational, and strategic decisions, which is expected to result in significant and unpredictable variations in our quarterly
returns; our creditworthiness, results of operations, and financial condition; the credit ratings of the shares; the prevailing
interest rates or rates of return being paid by other companies similar to us and the market for similar securities; failure to meet
analysts’ earnings estimates; publication of research reports about us or the investment management industry or the failure of
securities analysts to cover our shares; additions or departures of key management personnel; adverse market reaction to any
indebtedness we may incur or securities we may issue in the future; actions by stockholders; changes in market valuations of
similar companies; speculation in the press or investment community; changes or proposed changes in laws or regulations or
differing interpretations thereof affecting our businesses or enforcement of these laws and regulations, or announcements
relating to these matters; a lack of liquidity in the trading of our shares; adverse publicity about the investment management
industry generally or individual scandals, specifically; a breach of our computer systems, software, or networks, or
misappropriation of our proprietary information; and economic, financial, geopolitical, regulatory, or judicial events or
conditions that affect us or the financial markets.
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Carlyle Group Management L.L.C. has significant influence over us and its interests may conflict with ours or yours.
Carlyle Group Management L.L.C., which is wholly owned and controlled by our co-founders and other senior Carlyle
professionals, holds approximately 37.4% of the voting power of our common stock as of December 31, 2024, pursuant to an
irrevocable proxy granted to it by senior Carlyle professionals and certain other former limited partners of Carlyle Holdings
who became holders of shares of common stock in connection with the Conversion.
For so long as Carlyle Group Management L.L.C. continues to have voting power over a significant percentage of our
common stock, even though such amount is less than 50%, it will be able to significantly influence the composition of our
Board of Directors and the approval of actions requiring stockholder approval. Accordingly, for such period of time, Carlyle
Group Management L.L.C. will have significant influence with respect to our management, business plans, and policies,
including the appointment and removal of our officers. In particular, for so long as Carlyle Group Management L.L.C.
continues to own a significant percentage of our common stock, it will be able to cause or prevent a change of control of our
Company or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of our
Company. The concentration of ownership could delay or deter possible changes in control of our Company and could deprive
you of an opportunity to receive a premium for your shares of common stock as part of a sale of our Company and ultimately
might affect the market price of our common stock. In addition, sales of our common stock by one or more of our co-founders
may cause the market price of common stock to be volatile. The interests of Carlyle Group Management L.L.C. may not
coincide with our interests or the interests of other holders of our common stock. See “Risks Related to Our Common Stock—
The market price of our common stock has been and may continue to be volatile, which could cause the value of your
investment to decline.”
Our co-founders have the right to designate members of our Board of Directors.
Pursuant to the stockholder agreements with each of our co-founders, for so long as such co-founder and/or his
“Founder Group” (as defined in the stockholder agreements) beneficially owns at least 5% of our issued and outstanding
common stock, each of our co-founders will have the right to nominate one director to our Board of Directors. In addition, each
co-founder will have the right to nominate a second director to our Board of Directors until the earlier of (x) such time as such
co-founder and/or his Founder Group ceases to beneficially own at least 20 million shares of our common stock and (y) January
1, 2027. For so long as at least one co-founder is entitled to designate two directors to the Board of Directors, the co-founders
then serving on our Board of Directors may (i) designate a co-founder to serve as chair or co-chair and (ii) designate a co-
founder to serve on each of the compensation and nominating committees and any executive committee, subject to applicable
law and listing standards. Accordingly, for such period of time, our co-founders will have significant influence over the
composition of our Board of Directors and could prevent certain changes in the composition of our Board of Directors.
Our amended and restated certificate of incorporation does not limit the ability of our former general partner, co-founders,
directors, officers, or stockholders to compete with us.
Our amended and restated certificate of incorporation provides that none of Carlyle Group Management L.L.C., any
person that controls Carlyle Group Management L.L.C., and our co-founders, directors and officers, and stockholders will have
any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of
business in which we operate. In the ordinary course of their business activities, these persons may engage in activities where
their interests conflict with our interests or those of our other stockholders.
These persons also may pursue acquisition opportunities that may be complementary to our business and, as a result,
those acquisition opportunities may not be available to the Company. In addition, these persons may have an interest in our
pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though
such transactions might involve risks to our common stockholders.
Anti-takeover provisions in our organizational documents and Delaware law may discourage or delay acquisition attempts
for us that stockholders might consider favorable.
Our amended and restated certificate of incorporation and bylaws contain provisions that may make the merger or
acquisition of our company more difficult without the approval of our Board of Directors. Among other things, these
provisions:
•provide for the removal of directors only for cause;
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•provide that, if at any time any person or group (other than Carlyle Group Management L.L.C. and its affiliates, a
direct or subsequently approved transferee of Carlyle Group Management L.L.C. or its affiliates) beneficially owns
20% or more of any class of stock then outstanding, that person or group will lose voting rights on all of its shares of
stock and such shares may not be voted on any matter;
•would allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection
with a stockholder rights plan, financing transactions, or otherwise, the terms of which series may be established and
the shares of which may be issued without stockholder approval, and which may include super voting, special
approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;
•prohibit stockholder action by written consent unless such action is consented by the Board of Directors;
•provide for certain limitations on convening special stockholder meetings;
•provide (i) that the Board of Directors is expressly authorized to make, alter, or repeal our bylaws and (ii) that our
stockholders may only amend our bylaws with the approval of at least a majority of all of the outstanding shares of
our capital stock entitled to vote; and
•establish advance notice requirements for nominations for elections to our Board of Directors or for proposing
matters that can be acted upon by stockholders at stockholder meetings.
Moreover, as a Delaware corporation, we are subject to provisions of Delaware law, which may impede or discourage
a takeover attempt that our stockholders may find beneficial. These anti-takeover provisions and other provisions under
Delaware law and our stockholder agreements with our co-founders could discourage, delay, or prevent a transaction involving
a change in control of our company, including actions that our stockholders may deem advantageous, or could negatively affect
the trading price of our common stock. These provisions could also discourage proxy contests and make it more difficult for
you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery
in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against us and our
directors, officers, and stockholders.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that any claims,
suits, actions, or proceedings arising out of or relating in any way to our amended and restated certificate of incorporation may
only be brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction
thereof, any other court in the State of Delaware with subject matter jurisdiction. This provision may have the effect of
discouraging lawsuits against us and our directors, officers, and stockholders.
If The Carlyle Group Inc. were deemed to be an “investment company” under the Investment Company Act, applicable
restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse
effect on our business.
An entity generally will be deemed to be an “investment company” for purposes of the Investment Company Act if:
•it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting, or trading in securities; or
•absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of
the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
We believe that we are engaged primarily in the business of providing asset management services and not in the
business of investing, reinvesting, or trading in securities. We hold ourselves out as an asset management firm and do not
propose to engage primarily in the business of investing, reinvesting, or trading in securities. Accordingly, we do not believe
that The Carlyle Group Inc. is an “orthodox” investment company as defined in section 3(a)(1)(A) of the Investment Company
Act and described in the first bullet point above. Furthermore, The Carlyle Group Inc. does not have any material assets other
than its interests in certain wholly owned subsidiaries, which in turn have no material assets other than general partner interests
in the Carlyle Holdings partnerships. These wholly owned subsidiaries are the sole general partners of the Carlyle Holdings
partnerships and are vested with all management and control over the Carlyle Holdings partnerships. We do not believe that the
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equity interests of The Carlyle Group Inc. in its wholly owned subsidiaries or the general partner interests of these wholly
owned subsidiaries in the Carlyle Holdings partnerships are investment securities. Moreover, because we believe that the capital
interests of the general partners of our funds in their respective funds are neither securities nor investment securities, we believe
that less than 40% of The Carlyle Group Inc.’s total assets (exclusive of U.S. government securities and cash items) on an
unconsolidated basis are composed of assets that could be considered investment securities. Accordingly, we do not believe that
The Carlyle Group Inc. is an inadvertent investment company by virtue of the 40% test in section 3(a)(1)(C) of the Investment
Company Act as described in the second bullet point above. In addition, we believe that The Carlyle Group Inc. is not an
investment company under section 3(b)(1) of the Investment Company Act because it is primarily engaged in a non-investment
company business.
The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation
of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit
transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of
options, and impose certain governance requirements. We intend to conduct our operations so that The Carlyle Group Inc. will
not be deemed to be an investment company under the Investment Company Act. If anything were to happen that would cause
The Carlyle Group Inc. to be deemed to be an investment company under the Investment Company Act, requirements imposed
by the Investment Company Act, including limitations on our capital structure, ability to transact business with affiliates
(including us) and ability to compensate key employees, could make it impractical for us to continue our business as currently
conducted, impair the agreements and arrangements between and among The Carlyle Group Inc. and our senior Carlyle
professionals, and materially adversely affect our business, results of operations, and financial condition. In addition, we may
be required to limit the amount of investments that we make as a principal or otherwise conduct our business in a manner that
does not subject us to the registration and other requirements of the Investment Company Act.
The consolidation of investment funds, holding companies, or operating businesses of our portfolio companies could make it
more difficult to understand the operating performance of the Company and could create operational risks for the Company.
Under applicable U.S. GAAP standards, we may be required to consolidate certain of our investment funds, holding
companies, or operating businesses if we determine that these entities are VIEs and that we are the primary beneficiary of the
VIE, as discussed in Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements in Part II,
Item 8 of this Annual Report on Form 10-K. The consolidation of such entities could make it difficult for an investor to
differentiate our assets, liabilities, and results of operations apart from the assets, liabilities, and results of operations of the
consolidated VIEs. The assets of the consolidated VIEs are not available to meet our liquidity requirements and, similarly, we
generally have not guaranteed or assumed any obligation for repayment of the liabilities of the consolidated VIEs.
As of December 31, 2024, the total assets and liabilities of the consolidated VIEs reflected in the consolidated balance
sheets were $8.9 billion and $7.7 billion, respectively.
Risks Related to Taxation
Changes in relevant tax laws, regulations, or treaties or an adverse interpretation of these items by tax authorities could
negatively impact our effective tax rate, tax liability, and/or the performance of certain funds should unexpected taxes be
assessed to portfolio investments (companies) or fund income.
Our effective tax rate and tax liability is based on the application of current income tax laws, regulations, and treaties.
These laws, regulations, and treaties are complex, and the manner that they apply to us and our funds is sometimes open to
interpretation. Significant management judgment is required in determining our provision for income taxes, our deferred tax
assets and liabilities, and any valuation allowance recorded against our net deferred tax assets. Although management believes
its application of current laws, regulations, and treaties to be correct and sustainable upon examination by the tax authorities,
the tax authorities (including the Internal Revenue Service (“IRS”), which received additional funding under the Inflation
Reduction Act of 2022 (the “IRA”) to bolster enforcement of the U.S. tax code) could challenge our interpretation, resulting in
additional tax liability or adjustment to our income tax provision that could increase our effective tax rate.
There may be changes in tax laws or interpretations of tax laws (possibly with retrospective effect) in jurisdictions in
which we operate, are managed, are advised, are promoted, or invest. Such changes could materially increase the amount of
taxes, we, our portfolio companies, our investors, or our employees and other key personnel and service providers are required
to pay. In particular, both the level and basis of taxation may change. Changes to taxation treaties or interpretations of taxation
treaties between one or more such jurisdictions and the countries through which we hold investments, or the introduction of, or
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change to, EU directives may adversely affect our ability to efficiently realize income or capital gains and to efficiently
repatriate income and capital gains from the jurisdictions in which they arise.
Past and future changes to tax laws and regulations may have an adverse impact on us, including by materially and
adversely affecting the value of our investments or the feasibility of making certain investments. This could significantly affect
returns to investors, cause us to revalue our net deferred tax assets, and/or have a material change to our effective tax rate and
tax liabilities. In addition, foreign tax credit regulations published in 2022 impose significant additional requirements for
foreign taxes to be eligible for foreign tax credits. Although the U.S. Department of the Treasury (“Treasury”) and the IRS
provided relief in 2023 from certain provisions of these foreign tax credit regulations for the indefinite future, their potential
impact remains uncertain and could be adverse. In addition, final and proposed regulations published in 2024 related to
functional currency and taxation on foreign exchange transactions, which could change how taxpayers are currently computing
foreign exchange calculations. Further, the IRA introduced, among other things, a 15% alternative minimum tax on the
“adjusted financial statement income” of certain large corporations and a 1% excise tax on certain actual and deemed stock
repurchases. We are an applicable corporation that is subject to the alternative minimum tax, as well as a covered corporation
that is subject to the 1% excise tax. These and other changes may not only materially change the amount and/or timing of tax
we and our portfolio companies may be required to pay, but also may increase tax-related regulatory and compliance costs. The
alternative minimum tax requires complex computations to be performed that were not previously required in U.S. tax law,
significant judgments to be made in interpretation of the provisions of the IRA and proposed regulations, significant estimates
in calculations, and the preparation and analysis of information not previously relevant or regularly produced. Treasury, the
IRS, and other standard-setting bodies have issued some guidance and are expected to issue additional guidance on how the
alternative minimum tax provisions of the IRA will be applied or otherwise administered that may differ from our
interpretations. As we continue to comply with the provisions of the IRA and proposed regulations, collect and prepare
necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded
that may materially impact our provision for income taxes in the period in which adjustments are made. Lastly, Treasury and
the IRS issued a first set of proposed regulations related to previously taxed earnings and profits (“PTEP”) of foreign
corporations in 2024, which provides for changes to the accounting, basis adjustments, and calculations of PTEP.
Both the new administration and certain members of the U.S. Congress have stated that one of their top legislative
priorities is significant reform of the Internal Revenue Code and other federal tax laws. Among other things, the new
administration and Congress may pursue tax policies seeking to alter the income tax rates and brackets applicable to individuals
and corporations, exempt certain types of income from taxation, eliminate clean energy subsidies enacted by the IRA, provide
tax incentives for domestic production, and impose significant new tariffs on foreign goods. Both the timing and the details of
any such tax reform are unclear. The impact of any potential tax reform on us, our portfolio companies, and our investors is
uncertain and could be adverse. See “Risks Related to Our Company—We depend on our senior Carlyle professionals,
including our Chief Executive Officer, and the loss of their services or investor confidence in such personnel could have a
material adverse effect on our business, results of operations, and financial condition.”
State and local governments also may enact tax laws that could result in fundamental changes in state and local
taxation and have a material adverse effect on our results of operations, financial condition, and cash flow. In particular, both
the level and basis of taxation may change. For example, the State of New York issued final regulations on December 27, 2023,
that implemented comprehensive franchise tax reform for corporations, banks, and insurance companies. This did not have a
material impact to our consolidated financial statements; however, we will continue to monitor as additional guidance is
released by the State of New York.
Our workforce, including employees, key personnel, and service providers, has become more geographically dispersed
since the COVID-19 pandemic. This increased diversity of locations may result in higher tax and compliance costs for our
entities, including elevated payroll taxes and social security contributions. In addition, our entities may become subject to
taxation in jurisdictions where they were not previously considered to have a taxable presence. Should these increased tax costs
be passed on to employees or other personnel, or if stricter working arrangements are necessary to manage compliance risks,
our ability to attract and retain talent could be adversely impacted.
International tax developments also may significantly impact us. The OECD’s base erosion and profit shifting
(“BEPS”) project is focused on a number of issues, including the shifting of profits between affiliated entities in different tax
jurisdictions, interest deductibility, and eligibility for the benefits of double tax treaties. Several of the measures, including
measures covering treaty abuse (including an anti-abuse “principal purpose” test), the deductibility of interest expense, local
nexus requirements, transfer pricing, and hybrid mismatch arrangements are potentially relevant to some of our structures and
could have an adverse tax impact on our funds, investors, and/or our portfolio companies, including by adversely impacting our
ability to efficiently realize and repatriate income and capital gains from the jurisdictions in which they arise. Many individual
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jurisdictions have introduced domestic legislation implementing certain of the BEPS action points, but because timing of
implementation and the specific measures adopted will vary among participating member countries, uncertainty remains
regarding the impact of the BEPS proposals. Moreover, many of the jurisdictions in which we have made (or expect to make)
investments have now ratified, accepted, and approved the OECD’s Multilateral Instrument that brings into effect a number of
relevant changes to double tax treaty eligibility. While these changes continue to be introduced, there remains uncertainty as to
whether and to what extent we may benefit from such treaties and whether our funds may look to their investors in order to
derive tax treaty or other benefits. This position is likely to remain uncertain for a number of years.
In addition, the EU has adopted (and subsequently extended) an Anti-Tax Avoidance Directive (the “ATAD rules”),
which directly implements some of the BEPS project action points within EU law and requires EU Member States to transpose
the ATAD rules into their domestic laws. The ATAD rules, which include rules targeting reverse hybrids, and the domestic
laws that implement them are extensive, complex, and could apply to a wide range of scenarios. While certain countries have
issued guidance on the application of these rules, the impact of the ATAD rules and their application to our entities remains
uncertain. These rules could have an adverse tax impact on our firm, funds, investors, and/or our portfolio companies.
On January 17, 2023, the European Parliament approved a proposal for an anti-tax avoidance directive laying down
rules to prevent the misuse of shell entities for tax purposes within the EU (the “Unshell Proposal,” also known as “ATAD
III”). The final text will need to be approved by the Council of the European Union, although it is uncertain at this stage
whether the Unshell Proposal will move forward to implementation. If it is implemented, the Unshell Proposal could, among
other things, impose additional taxes on our entities (including by imposing additional limitations on the deductibility of interest
payments) and/or impact our ability to repatriate investment returns and/or international profits in a tax efficient way resulting
in additional tax costs and/or reporting, disclosure, and computation obligations (which could result in increased administrative
and compliance costs) for our entities.
In addition, a number of proposals from the European Commission have been issued or adopted that further enhance
and move beyond the work on the BEPS project. First, a package of tax reforms was adopted by the European Commission on
September 12, 2023, comprising the “Proposal for a Council Directive on Business in Europe: Framework for Income
Taxation” (“BEFIT”) (which seeks to produce a comprehensive solution for business taxation in the EU) and the “Proposal for
a Council Directive on transfer pricing” (which seeks to harmonize transfer pricing rules within the EU and ensure a common
approach to transfer pricing). BEFIT aims to introduce a common set of rules for EU companies to calculate their taxable base
while ensuring a more effective allocation of profits between EU countries. Following adoption by the European Council, the
proposals are intended to come into force on July 1, 2028 (for BEFIT) and January 1, 2026 (for the transfer pricing proposals).
BEFIT has the potential to alter taxing rights with the EU and may include substantive changes to applicable tax rules. Second,
the European Council has agreed to implement changes to the procedures used across the European Union in respect of
withholding taxes (known as “FASTER”). Specifically, the changes are aimed to simplify the procedures for a refund or to
apply for relief at the source; however, the changes could have broader implications. These withholding tax proposals are
expected to come into effect from January 1, 2030. The details and timing of the implementation of BEFIT (if adopted) and
FASTER and the impact on our funds, or any entities in or through which our funds invest, is uncertain.
The OECD also has issued proposals, commonly referred to as “BEPS 2.0,” which fundamentally change the
international tax system. The proposals are based on two “pillars” involving the shifting of taxing rights to the jurisdiction of
the consumer (“Pillar One”) and ensuring all companies pay a global minimum corporate tax (“Pillar Two”).
Under Pillar One, multinational enterprises (“MNEs”) with an annual global turnover of at least EUR 20 billion will be
subject to rules allocating a formulaic share of consolidated profits in excess of a 10% profit margin to the jurisdictions where
their consumers or users are located (subject to threshold rules). MNEs carrying on specific low-risk activities are excluded,
including “regulated financial services.” Pillar Two imposes a minimum effective tax rate of 15% on MNEs that have
consolidated revenues of at least EUR 750 million in at least two out of the last four years. Pillar Two introduces three related
tax measures (the “GloBE” rules): the qualified domestic minimum top-up tax (“QDMTT”) is assessed by a low-taxed
jurisdiction itself, the income inclusion rule (“IIR”) imposes a top up tax on a parent entity where a constituent member of the
MNE group has low-taxed income, and lastly, the undertaxed payment rule applies to intra-group payments if a constituent
member’s income is not taxed by an IIR or QDMTT. In addition, a subject to tax rule (“STTR”) will permit source jurisdictions
to impose limited withholding taxes on low-taxed related party payments, which will be creditable against the GloBE rules tax
liability. The OECD has released model rules and commentary for Pillar Two, including guidance on the treatment of taxes paid
by U.S. companies on non-U.S. income under the U.S. Global Intangible Low-Taxed Income regime. The proposals are
complex and subject to significant uncertainty, and consultation in respect of certain aspects of the rules is ongoing as we await
further guidance from the OECD. It is anticipated that certain classes of entities that are typically exempt from tax will be
outside of the scope of Pillar Two, including investment funds and real estate investment vehicles (as respectively defined),
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which are the ultimate parent entity of the MNE group (and certain holding vehicles of such entities); however, the application
of these exemptions to our entities remains open to significant uncertainty. Although certain elements of Pillar Two have been
implemented, important details, in particular on the implementation of certain elements of Pillar One, are still awaited. In
addition, the U.S. is not expected to enact Pillar Two, creating additional uncertainty as to the application of these rules to
multinational enterprises with a U.S. parent entity, and it is not yet clear whether a U.S. foreign tax credit will be available with
respect to these additional taxes, which may result in a higher overall tax cost.
Various countries have implemented or intend to implement the OECD’s recommended model rules. In particular, the
Council of the European Union formally adopted Pillar Two and required all 27 EU member states to adopt local legislation
during 2023 to implement Pillar Two rules that apply in respect of the fiscal years beginning from December 31, 2023, and a
number of other countries outside the EU member states have implemented (or are currently proposing to implement) core
elements of the Pillar Two proposal. Many other countries also will seek to implement other proposals including a potential
digital services tax. There remains significant uncertainty as to the interaction of these rules and, subject to the development and
implementation of both Pillar One and Pillar Two (including the details of any domestic legislation, double taxation treaty
amendments, and multilateral agreements that may be necessary to implement them), effective tax rates could increase for our
firm, funds, portfolio companies, and investors, including by way of higher levels of tax being imposed, possible denial of
deductions, increased withholding taxes, and/or profits being allocated differently. It is likely that our entities also will be
subject to significant additional compliance and/or reporting obligations. Any tax laws, regulations, or treaties newly enacted or
enacted in the future also may cause us to revalue our net deferred tax assets and have a material change to our effective tax rate
and tax liabilities, as a result.
Moreover, the Netherlands continues to provide additional updates to its withholding tax on dividends. As of January
1, 2024, dividend distributions made by Dutch companies to “associated beneficiaries” established in blacklisted jurisdictions
(or non-blacklisted jurisdictions, in the case of situations that are deemed to be “abusive”) may be subject to a conditional
withholding tax. The applicable tax rate is linked to the highest corporate income tax in the relevant year (being 25.8% in
2025). We are monitoring the impact of these rules, which could result in additional withholding taxes being levied on our
investment funds or on repatriation of income and gains generated.
U.S. and foreign tax regulations could adversely affect our ability to raise funds from certain foreign investors and increase
compliance costs.
We must comply with complicated and expansive information tax reporting regimes in multiple jurisdictions, which
require us to perform due diligence and to report information about certain account holders and investors, as well as potential
withholding. Failure to comply with these requirements could result in increased administrative and compliance costs for our
investment entities and, in some cases, could subject our investment entities to increased withholding taxes or monetary
penalties.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.
ITEM 1C.CYBERSECURITY
Risk Management and Strategy
our Global Technology & Solutions (“GTS”) team in partnership with our business, legal, and compliance teams, and are
essential for us to conduct investment activities, manage internal administration activities, and connect our global enterprise.
Our systems, data, network, and infrastructure are monitored and administered by formal controls and risk management
processes that log events and help protect the firm’s data. In addition, our business continuity plans are designed to allow
critical business functions to continue in an orderly manner in the event of an emergency. The GTS team works closely with our
business segment teams to maintain operational resilience through business continuity planning and annual information
technology disaster recovery and incident response plan testing, which collectively support the goal of mitigating risk were an
emergency to occur. These efforts are underpinned by the implementation of security best practices, where possible, such as:
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•Multi-factor authentication for remote access, privileged access management for system administrators,
application whitelisting, laptop encryption, mobile device management software, and advanced malware
defenses on endpoints;
•Incident preparedness and response planning and risk mitigation;
•Independent and continuous security testing, assessment, and third-party risk and vulnerability management;
•Regular security awareness training, including phishing simulations, for Carlyle authorized users;
•Restrictions on access to personal email accounts, cloud storage, social media, risk-based categories of
websites, and USB storage devices;
•Device and system access management policies and procedures that restrict access upon employee or
contractor separation from the company; and
•Compliance attestations by Carlyle personnel on firm policies, such as our acceptable use policy, upon hire
and annually.
external service providers before onboarding and provides ongoing monitoring in accordance with certain risk-based
cybersecurity criteria.
incidents, have not materially affected us, including our business strategy, results of operations, or financial condition; however,
we may learn new facts about these detected or undetected incidents and these facts may lead us to change this materiality
and controls we utilize to mitigate these threats will be sufficient to prevent disruptions to our systems. Consequently, given
that the magnitude of cybersecurity incidents or threats are difficult to predict, we are unable to determine at this time whether
risks from cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of
operations, or financial condition. For an additional description of cybersecurity risk and potential related impacts on us, see
Part I, Item 1A “Risk Factors—Risks Related to Our Company—Operational risks (including those associated with our
business model), system security risks, breaches of data protection, cyberattacks, or actions or failure to act by our employees
or others with authorized access to our networks, including our ability to insure against such risks, may disrupt our businesses,
result in losses, or limit our growth.”
Governance
risks, directly and through its committees. In this respect, the Audit Committee of the Board of Directors (the “Audit
Committee”) oversees our risk management program, which focuses on the most significant risks we face in the short-,
year, including, among others, those relating to cybersecurity, and reports from the Chief Audit Executive on our enterprise risk
profile on an annual basis. In addition, our Chief Information Security Officer (“CISO”) leads our cybersecurity program, chairs
our Information Security Steering Committee (“ISSC”), and provides cybersecurity status reporting to our Audit Committee at
least annually. The ISSC meets quarterly and ensures that cybersecurity initiatives are in alignment with Carlyle’s strategic
priorities.
and practices throughout our operations that are designed to address cybersecurity threats, events, and incidents. In particular,
our cybersecurity program supports security governance, security awareness and training, security engineering and architecture,
security risk management, vulnerability management, security monitoring, and incident response capabilities. In addition, our
incident response plan contains escalation and reporting protocols, including reporting to the firm’s Disclosure Committee to
consider materiality of cybersecurity incidents. Policies and procedures are in place to assist the firm’s Disclosure Committee
with these materiality assessments and any resulting reporting requirements.
Chief Risk Officer, and Chief Audit Executive, among certain other senior executives, is responsible for leading the assessment
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and management of cybersecurity risks. The current CISO has over 22 years of experience in information security that includes
key roles managing cybersecurity risk in both government and the private sector. As described above, our CISO leads our
cybersecurity program, chairs Carlyle’s ISSC that comprises senior management and other sector representatives, and provides
cybersecurity status reporting to our Audit Committee as necessary and at least annually.
ITEM 2.PROPERTIES
Our principal executive offices are located in leased office space at 1001 Pennsylvania Avenue, NW, Washington,
D.C. We also lease the space for our other 28 offices. We do not own any real property. We consider these facilities to be
suitable and adequate for the management and operation of our business.
ITEM 3.LEGAL PROCEEDINGS
In the ordinary course of business, the Company is a party to litigation, investigations, inquiries, employment-related
matters, disputes and other potential claims. See Note 8, Commitments and Contingencies, to the consolidated financial
statements in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of certain of these matters.
ITEM 4.MINE SAFETY DISCLOSURES
Not Applicable.
PART II.
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Nasdaq Global Select Market under the symbol “CG.”
The number of holders of record of our common stock as of February 20, 2025 was 6. This does not include the
number of stockholders that hold shares in “street name” through banks or broker-dealers.
Dividend Policy
Under our dividend policy for our common stock, we expect to pay our common stockholders an annualized dividend
of $1.40 per share of common stock, equal to a quarterly dividend of $0.35 per share of common stock.
The declaration and payment of any dividends to holders of our common stock are subject to the discretion of our
Board of Directors, which may change our dividend policy at any time or from time to time, and the terms of our amended and
restated certificate of incorporation. There can be no assurance that dividends will be made as intended or at all or that any
particular dividend policy will be maintained.
Stock Performance Graph
The following graph depicts the total return to holders of our common stock from the closing price on December 31,
2019, the last trading day of our 2019 fiscal year, through December 31, 2024, the last trading day of our 2024 fiscal year,
relative to the performance of the Dow Jones U.S. Asset Managers index and the S&P MidCap 400 index. The graph assumes
$100 invested on December 31, 2019, and dividends received reinvested in the security or index.
The performance graph is not intended to be indicative of future performance. The performance graph shall not be
deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject
to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings
under the Securities Act or the Exchange Act.
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Issuer Purchases of Equity Securities
The following table sets forth repurchases of our common stock during the three months ended December 31, 2024 for
the periods indicated. During the three months ended December 31, 2024, 1.0 million shares were repurchased. In addition, 0.5
million shares were retired in connection with the net share settlement of equity-based awards, which are not included in the
table below.
Period | (a) Total number of shares purchased | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (3) |
(Dollars in millions, except unit and per unit data) | ||||
October 1, 2024 to October 31, 2024 (1) | — | $— | — | $1,054.4 |
November 1, 2024 to November 30, 2024 (1)(2) | 716,872 | $52.17 | 716,872 | $1,017.0 |
December 1, 2024 to December 31, 2024 (1)(2) | 238,937 | $52.82 | 238,937 | $1,004.4 |
Total | 955,809 | 955,809 | ||
(1)The Board of Directors reset the total repurchase authorization of our previously approved share repurchase program
to $1.4 billion in shares of our common stock, effective as of February 6, 2024, which authorization replaced the
Company’s prior $500 million authorization. Under the share repurchase program, shares of our common stock may
be repurchased from time to time in open market transactions, in privately negotiated transactions, or otherwise,
including through Rule 10b5-1 plans. The timing and actual number of shares of common stock repurchased will
depend on a variety of factors, including legal requirements and price, economic, and market conditions. In addition
to the repurchase of common stock, the share repurchase program is used for the payment of tax withholding amounts
upon net share settlement of equity-based awards granted pursuant to our Equity Incentive Plan or otherwise based on
the value of shares of withheld that would have otherwise been issued to the award holder. The repurchase program
may be suspended or discontinued at any time and does not have a specified expiration date.
(2)Reflects shares purchased in open market and brokered transactions, which were subsequently retired.
(3)The remaining repurchase authorization was $852.2 million as of December 31, 2024, when factoring in the net share
settlement of equity-based awards.
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Sales of Unregistered Securities
In 2017, we amended our agreement with NGP Management. Pursuant to the amended agreement, we agreed, among
other things, to issue additional shares of common stock on each of February 1, 2018, 2019, and 2020, with a value of $10.0
million per year to an affiliate of NGP Management. For each year thereafter, we agreed to issue additional shares of common
stock on February 1 in an amount based on total distributions received by the Company from NGP Management, in any case
not to exceed $10.0 million per year.
In order to effectuate the amended NGP agreement, we entered into agreements with an affiliate of NGP Management
on each of the dates below to deliver such shares as follows:
Shares of Common Stock Delivered / Deliverable in August | |||||||||||||
2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |||||||
Date of Agreement: | |||||||||||||
February 1, 2019 | 164,393 | — | — | — | — | — | — | ||||||
February 1, 2020 | 89,821 | 89,820 | — | — | — | — | — | ||||||
February 1, 2021 | 116,559 | 87,419 | 87,418 | — | — | — | — | ||||||
February 1, 2022 | — | 75,290 | 56,467 | 56,467 | — | — | — | ||||||
February 1, 2023 | — | — | 103,432 | 77,574 | 77,573 | — | — | ||||||
February 1, 2024 | — | — | — | 98,918 | 74,188 | 74,187 | — | ||||||
February 1, 2025 | — | — | — | — | 68,757 | 51,567 | 51,567 | ||||||
Such securities have been offered and sold in reliance on the exemption contained in Section 4(a)(2) of the Securities
Act as a transaction by the issuer not involving a public offering. No general solicitation or underwriters were involved in such
offer and sale.
Rule 10b5-1 Trading Plans
As permitted by our policies and procedures governing transactions in our securities by our directors, executive
officers, and other employees, from time to time, some of these persons may establish plans or arrangements complying with
Rule 10b5-1 under the Exchange Act, and similar plans and arrangements relating to our common stock.
ITEM 6.[RESERVED]
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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Unless context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us,” and “our”
refer to The Carlyle Group Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in
conjunction with the consolidated financial statements and the related notes included in this Annual Report on Form 10-K.
The following discussion includes a comparison of our results for the years ended December 31, 2024 and 2023. For a
discussion of our results for the year ended December 31, 2022 and a comparison of results for the years ended December 31,
2023 and 2022, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
of our Annual Report on Form 10-K for the year ended December 31, 2023, which specific discussion is incorporated herein by
reference.
Overview
We are one of the world’s largest global investment firms that deploys private capital across its business, and we
conduct our operations through three reportable segments: Global Private Equity, Global Credit, and Global Investment
Solutions.
•Global Private Equity—Our Global Private Equity segment advises our buyout, middle market, and growth
capital funds, our U.S. and internationally focused real estate funds, and our infrastructure and natural
resources funds. The segment also includes the NGP Carry Funds advised by NGP. As of December 31,
2024, our Global Private Equity segment had $163.5 billion in AUM and $98.0 billion in Fee-earning AUM.
•Global Credit—Our Global Credit segment advises funds and vehicles that pursue investment strategies
including insurance solutions, liquid credit, opportunistic credit, direct lending, asset-backed finance, aviation
finance, infrastructure credit, cross-platform credit products, and global capital markets. As of December 31,
2024, our Global Credit segment had $192.4 billion in AUM and $154.2 billion in Fee-earning AUM.
•Global Investment Solutions—Our Global Investment Solutions segment advises global private equity
programs and related co-investment and secondary activities. As of December 31, 2024, our Global
Investment Solutions segment had $85.1 billion in AUM and $52.1 billion in Fee-earning AUM.
We earn management fees pursuant to contractual arrangements with the investment funds that we manage and fees for
transaction advisory and oversight services provided to portfolio companies of these funds. We also typically receive a
performance fee from an investment fund, which may be either an incentive fee or a special residual allocation of income,
which we refer to as a performance allocation, or carried interest, in the event that specified investment returns are achieved by
the fund. Under U.S. generally accepted accounting principles (“U.S. GAAP”), we are required to consolidate some of the
investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that
deconsolidates these investment funds. Refer to Note 15, Segment Reporting, to the consolidated financial statements included
in this Annual Report on Form 10-K for more information on the differences between our financial results reported pursuant to
U.S. GAAP and our financial results for segment reporting purposes.
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Trends Affecting our Business
The year 2024 was marked by the initiation of a broad global monetary policy easing cycle against a backdrop of
stable growth. Amid more favorable financing conditions, global mergers and acquisitions (“M&A”) activity recovered
modestly, though exit conditions remained challenging as market participants exercised patience in anticipation of future rate
cuts and lower borrowing costs. Entering 2025, as the inflation and growth outlook for the U.S. has grown more complex, the
expectation of near-term rate cuts and lower borrowing costs has dissipated, which we expect will in turn facilitate greater deal
activity. Globally, central banks’ policy paths appear likely to be far less synchronized than during the recent simultaneous
tightening cycle. Central banks in most other developed markets (with Japan a notable exception) have room to further cut rates
as inflation risks diminish and economic weakness persists, which could in turn put more upward pressure on the U.S. dollar.
At its last meeting of 2024, the Federal Open Market Committee (“FOMC”) reduced the federal funds rate by 25 basis
points, marking the third consecutive cut of the year and bringing cumulative 2024 reductions to 100 basis points. However, the
Federal Reserve’s preferred inflation gauge, the core PCE Price Index, ended the year up 2.8% year-over-year, reflecting a lack
of further downward inflation progress in recent months. While outright reinflation has not yet materialized, strong economic
data, inflation readings persistently above target, and easy financial conditions have raised questions about whether current
interest rate policy remains as restrictive as Federal Reserve officials suggest. The FOMC opted to pause further rate reductions
at its January 2025 meeting. Futures have now priced in just one to two additional cuts in 2025, down from expectations for six
as recently as September 2024. Notably, 10-year Treasury yields have risen rapidly since the first interest rate cut in September,
a phenomenon that is without precedent across the seven prior easing cycles. Though attributed by many to potential changes in
trade, immigration, and fiscal policy, this may also reflect the market’s realization that base rates may not currently be as
restrictive as previously thought.
The economy grew at an estimated 2.3% annualized rate in the fourth quarter of 2024 and averaged 2.8% over the
year, despite higher levels of interest rates. Overall, U.S. economic growth has outperformed relative to consensus expectations
over the past two years. This has been driven by government spending and large fiscal deficits, resilient household
consumption, supported by the prevalence of fixed-rate liabilities that have insulated disposable income from higher borrowing
costs, and, most significantly, by a generational boom in industrial fixed investment tied to AI spend and the energy transition.
This marked increase in capital expenditures has been led by companies known as “hyperscalers” (Amazon, Alphabet, Meta,
and Microsoft), and highlights a level of continued concentration risk to both U.S. economic growth and equity performance.
Any pullback in spending or shift in AI strategy could have notable negative implications for the broader U.S. macro-outlook.
While U.S. economic growth has consistently surprised to the upside and the inflation outlook has grown more
uncertain, euro area growth has by contrast struggled, and the European Central Bank’s (“ECB”) inflation target is now within
reach. The ECB delivered two additional 25 basis point cuts to its deposit rate during the fourth quarter of 2024, following two
cuts earlier in the year, and another 25 basis point cut in January 2025. Forward interest rates imply that the gap between U.S.
dollar and euro base rates will widen to more than 200 basis points over the next year, suggesting there is potential for the euro
to break through parity with the dollar. Euro area GDP grew at just a 0.2% annualized rate during the fourth quarter, though
underlying performance across member states has diverged. Germany, the region’s largest economy, continues to bear the brunt
of the energy supply shock caused by Russia’s invasion of Ukraine. German energy-intensive manufacturing output has fallen
20% below pre-invasion levels and the manufacturing job market there is now weaker than at any time since tracking began in
2002 outside of the Global Financial Crisis (GFC) and the onset of the COVID-19 pandemic. Growth in Spain, by contrast, has
been a relative bright spot and is projected to have grown 3.2% in 2024, over four times the eurozone average, boosted by
strong tourism flows and services exports. Outside of the euro area, the UK economy also expanded sluggishly, growing at a
0.4% annualized rate in the fourth quarter. The Bank of England’s policy outlook is complicated by persistent price pressures in
the context of this slower growth.
While global monetary policy generally eased in 2024, the opposite was true for Japan. The Bank of Japan (“BoJ”)
ended its negative interest rate regime in 2024 and outlined a plan to taper its asset purchases, a pivotal shift from its decade-
long stimulus program. Through January 2025, the BoJ has raised its policy rate three times to a current level of 0.5%, its
highest since 2008, as annual inflation remains elevated relative to target. Although Japan experienced a contraction in the first
quarter of 2024, its economy has since gained momentum with three consecutive quarters of growth supported by both
domestic demand and strong semiconductor and electronics output. Against this backdrop, it seems likely that the BoJ will raise
rates again by June 2025. In India, economic growth slowed through 2024, prompting the Reserve Bank of India to cut its
benchmark interest rate by 25 basis points to 6.25%—its first reduction in five years—as policymakers sought to support
weakening consumption and investment even as inflation pressures remained elevated. In China, underlying growth was uneven
as policymakers implemented targeted measures to stabilize property markets and boost domestic demand amid the country’s
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transition to a sustainable growth model centered on high-value industries such as semiconductors, batteries, and electric
vehicles (EVs).
Earnings are estimated to have grown by 16.9% in the fourth quarter of 2024 compared to the same period a year ago,
led by the financials, communication services, and consumer discretionary sectors. The estimated blended net profit margin for
the fourth quarter of 2024 was reported at 12.5%, nearly a full percentage point higher than the 11.3% margin observed a year
earlier.
The new U.S. administration has introduced aggressive and unpredictable trade policies and has imposed or threatened
to impose tariffs on goods, materials, inputs, and intermediate parts with numerous U.S. trade partners. The tariffs proposed to
date, if enacted in full, would amount to a tax increase roughly equivalent to 1% of GDP, a shock large enough to have negative
implications for broader growth. Analysts do not appear to have factored this risk into their estimates so far, and currently
expect results for full-year 2025 to not only meet but exceed those for 2024, with earnings growth for companies in the S&P
500 projected to be nearly 13%, compared to 10% in 2024. These optimistic projections suggest potential downside risk to
equities in 2025 in the event that actual results disappoint relative to estimates. Within our portfolio, the majority of our Global
Private Equity segment is either domestically focused or services- rather than goods-oriented, which we believe mitigates
exposure to tariff risk. However, we continue to closely monitor shifts in global trade policy and evaluate their potential
impacts.
Global financial markets generally performed well in 2024. The S&P 500 returned 23%, nearly matching its
performance in 2023. For a second consecutive year, returns in the U.S. were driven by a small number of mega-cap tech stocks
(known as the “Magnificent Seven”). These stocks accounted for over half of the S&P 500’s annual return and made up an
astounding 34% of the index’s market cap by the end of December. Excluding the Magnificent Seven, the “S&P 493” returned
11% in 2024. Notably, since the market bottom in October 2022, value-weighted returns across the U.S. equity market have
outpaced equal-weighted returns by over 20 percentage points on an annualized basis. In 2024, the broad U.S. equity market
returned 8% on an equal-weighted basis. This represents a significant divergence from historical norms, as value-weighted and
equal-weighted performance were roughly comparable over the previous decade. The reliance of U.S. equity outperformance on
a small pool of mega-cap tech stocks and the dichotomy of value-weighted versus equal-weighted returns both complicates the
effort to benchmark returns in the private markets and highlights the concentration risk of public equity performance in 2025.
Equities elsewhere lagged U.S. performance in 2024 but still produced positive returns and were comparable to the
U.S. results excluding the Magnificent Seven. In euro terms, the Euro Stoxx 50 rose 8.3% over the year, but was nearly flat
(+1.3%) in dollar terms, largely due to rapid euro depreciation that started in the fourth quarter and accelerated in the aftermath
of the U.S. election. This combination of significantly cheaper valuations relative to U.S. equities (forward ratios are nearly
40% lower) and the historically weak euro have brought investors back to the market: year-to-date through February 11, 2025,
the Euro Stoxx 50 is up nearly 10% compared to just 3% for the S&P 500. Japan’s Nikkei 225 and China’s Shanghai
Composite returned 19% and 12%, respectively, in 2024, while the MSCI World Index closed the year up 17% despite a
weaker fourth quarter. This robust full-year performance across indexes masks interim volatility during the year, the most
notable of which was the selloff in the third quarter associated with the monetary policy-driven disruption to the yen carry
trade. As demonstrated by full-year returns, equities recovered relatively quickly, although the Nikkei 225 remains 5.5% below
its July 11th peak as of year-end 2024. A stronger yen in 2025 due to narrowing interest rate differentials with the U.S. could
put downward pressure on Japanese equities.
Credit spreads across both leveraged loans and high yield bonds compressed to post-2008 lows in 2024 as strong
demand, particularly from collateralized loan obligations (“CLOs”), continued to outpace supply. Historically tight credit
spreads drove a surge in refinancing activity, pushing total global leveraged finance issuance in 2024 to nearly $1.2 trillion, up
92% from 2023 and one of the highest years on record. In the U.S., leveraged loan issuance doubled to $654 billion, the highest
total outside of the 2021 pandemic-era boom, with about half used for refinancing. Non-refinancing issuance also rebounded in
2024: in the U.S., total M&A-related leveraged loan volumes for the year (including pro-rata transactions) were 95% higher
than in 2023, led by a more than 200% increase in volume tied to leveraged buyout (“LBO”) activity. In Europe, leveraged loan
issuance rose 130% to $117 billion, returning to pre-pandemic averages.
Against this backdrop of relatively favorable financing conditions, global M&A activity recovered modestly, totaling
$3.5 trillion in 2024, a 12% increase over 2023 but still 11% lower than the yearly average from 2015 through 2019 and 41%
below the $6 trillion surge in 2021. Europe led the recovery, with deal volume rising 15% to $884 billion, though momentum
softened in the second half. U.S. M&A volume reached $1.6 trillion, an 8% increase, while Asia-Pacific transactions totaled
$858 billion, a 12% increase, with deal activity accelerating in the second half of the year. Buyout activity also rebounded, with
financial sponsors announcing $448 billion in buyout transactions, a 35% increase over 2023. Including add-ons, total deal
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volume reached $520 billion, up 27% year-over-year and roughly in line with historical averages from 2015 through 2019. U.S.
targets accounted for 42% of global buyout volume, while Europe represented 37%. Despite more robust deal activity, exit
conditions remained challenging, with buyout-backed exits rising just 6% from 2023, while total deal value fell by 12% as deal
sizes declined on average. However, the IPO market showed early signs of recovery, with 168 U.S.-listed IPOs raising $32
billion, a 60% increase in proceeds and a 44% rise in transaction count compared to 2023.
Our carry fund portfolio appreciated 8% during 2024. Within our Global Private Equity segment, our corporate private
equity funds appreciated 8%, with particular strength in our two latest vintage U.S. buyout funds, which appreciated 15% and
21%, respectively, during the year, outpacing growth in the S&P 493. Our infrastructure and natural resources funds
appreciated 8%, and our real estate funds appreciated 5%. Our Global Credit carry funds (which represent approximately 11%
of the total Global Credit remaining fair value as of December 31, 2024) appreciated 12% in 2024 and carry funds in our Global
Investment Solutions segment appreciated 9%.
Activity across our platform in 2024 reflected the rebound in global deal activity during the year over depressed 2023
levels. During the year ended December 31, 2024, our net transaction and portfolio advisory fees of $152.5 million more than
doubled from $68.6 million last year, driven by significant activity in our capital markets business. We generated $28.6 billion
in realized proceeds from our carry funds, including $12.4 billion from our corporate private equity funds which nearly doubled
from $6.5 billion in realized proceeds in 2023. We deployed $42.7 billion across our platform during 2024, a nearly 50%
increase compared to $28.8 billion in 2023, which included $8.2 billion and $10.0 billion in invested capital in our Global
Private Equity and Global Investment Solutions segments. In our Global Credit segment, deployment of $24.5 billion in 2024
included the closing of ten new CLOs, gross originations across our platform including $3.7 billion in direct lending, and
invested capital in our carry funds. Over one-third of our realized proceeds in 2024 were generated in the fourth quarter,
reflecting the acceleration of deal activity in the latter part of the year.
We had $40.8 billion in capital inflows in 2024, exceeding our previously announced target of $40 billion, with Global
Credit and Global Investment Solutions comprising over two-thirds of the activity. While we believe that we will continue to
attract a significant amount of capital for our buyout funds, we have seen a decline in buyout fund sizes across most
geographies, which may continue to result in lower management fees in Global Private Equity in the future.
The U.S. Securities and Exchange Commission (the “SEC”) has put forth several rule proposals, and we are evaluating
the potential impacts to our business and operations and those of our portfolio companies. The future of several final rules, such
as the public company climate-related disclosure rules and the private fund adviser rules, is in doubt pending the resolution of
recent litigation. We are closely evaluating potential impacts to our business of rule proposals and adoptions and various
financial, regulatory, and other proposals put forth by the new administration and Congress. The potential for policy changes
may create regulatory uncertainty for our investment strategies and our portfolio companies and could adversely affect our
profitability and the profitability of our portfolio companies.
Recent Developments
Dividends
In February 2025, the Company’s Board of Directors declared a quarterly dividend of $0.35 per share to common
stockholders of record at the close of business on February 21, 2025, payable on February 28, 2025.
Key Financial Measures
Our key financial measures and operating metrics are discussed in the following pages. Additional information
regarding U.S. GAAP measures and our other significant accounting policies can be found in Note 2, Summary of Significant
Accounting Policies, to the consolidated financial statements included in this Annual Report on Form 10-K.
Revenues
Revenues primarily consist of Fund management fees, Incentive fees, Investment income (including Performance
allocations, realized and unrealized gains of our investments in our funds and other principal investments), as well as Interest
and other income.
Fund management fees. Fund management fees include management fees and transaction and portfolio advisory fees.
We earn management fees for advisory services we provide to funds in which we hold a general partner interest or to funds or
certain portfolio companies with which we have an investment advisory or investment management agreement. These fees are
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largely from either traditional closed-end, long-dated funds, which are highly predictable and stable, or Perpetual Capital
products as defined below. Management fees also include catch-up management fees, which are episodic in nature and
represent management fees charged to fund investors in subsequent closings of a fund which apply to the time period between
the fee initiation date and the subsequent closing date. We also earn management fees on our CLOs and other structured
products.
Transaction and portfolio advisory fees generally include capital markets fees generated by Carlyle Global Capital
Markets in connection with activities related to the underwriting, issuance and placement of debt and equity securities, and loan
syndication for our portfolio companies and third-party clients, which are generally not subject to rebate offsets as described
below with respect to our most recent vintages (but are subject to the rebate offsets set forth below for older funds).
Underwriting fees include gains, losses, and fees arising from securities offerings in which we participate in the underwriter
syndicate.
Transaction and portfolio advisory fees also include fees we receive for the transaction and portfolio advisory services
we provide to our portfolio companies. When covered by separate contractual agreements, we recognize transaction and
portfolio advisory fees for these services when the performance obligation has been satisfied and collection is reasonably
assured. We are generally required to offset our fund management fees by the transaction and advisory fees earned, which we
refer to as “rebate offsets.”
The recognition of portfolio advisory fees, transactions fees, and capital markets fees can be volatile as they are
primarily generated by investment activity within our funds, and therefore are impacted by our investment pace or other capital
transactions at our portfolio companies.
Incentive fees. Incentive fees consist of performance-based incentive arrangements pursuant to management contracts,
primarily from certain of our Global Credit funds, when the return on assets under management exceeds certain benchmark
returns or other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has
been achieved.
Investment income (loss). Investment income (loss) consists of our performance allocations as well as the realized and
unrealized gains and losses resulting from our equity method investments and other principal investments.
Performance allocations consist principally of the performance-based capital allocation from fund limited partners to
us, commonly referred to as carried interest, from certain of our investment funds, which we refer to as the “carry funds.”
Carried interest revenue is recognized by Carlyle upon appreciation of the valuation of our funds’ investments above certain
return hurdles as set forth in each respective partnership agreement and is based on the amount that would be due to us pursuant
to the fund partnership agreement at each period end as if the funds were liquidated at such date. Accordingly, the amount of
carried interest recognized as performance allocations reflects our share of the fair value gains and losses of the associated
funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior
period. As a result, the performance allocations earned in an applicable reporting period are not indicative of any future period,
as fair values are based on conditions prevalent as of the reporting date. Refer to “—Trends Affecting our Business” for further
discussion.
For any given period, performance allocations revenue on our statement of operations may include reversals of
previously recognized performance allocations due to a decrease in the value of a particular fund that results in a decrease of
cumulative performance allocations earned to date. Since fund return hurdles are cumulative, previously recognized
performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate.
Additionally, unrealized performance allocations reverse when performance allocations are realized, and unrealized
performance allocations can be negative if the amount of realized performance allocations exceed total performance allocations
generated in the period. The timing and receipt of realized performance allocations varies with the lifecycle of our carry funds
and there is often a difference between the time we start accruing performance allocations and realization. The timing of
performance allocations realizations from our Global Investment Solutions, Carlyle Aviation, and Abingworth funds is typically
later than in our other carry funds based on the terms of such arrangements.
Under our arrangements with the historical owners and management teams of AlpInvest and Abingworth, the amount
of carried interest to which we are entitled varies. In some cases, we are entitled to 15% of the carried interest in respect of
commitments from the historical owners of AlpInvest for the period between 2011 and 2020. In certain instances, carried
interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in the Netherlands. Additionally, in
connection with the acquisition of Abingworth, we are entitled to 15% of carried interest generated from certain Abingworth
funds.
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Realized carried interest may be clawed back or given back to the fund if the fund’s investment values decline below
certain return hurdles, which vary from fund to fund. This amount is known as the “giveback obligation.” In all cases, each
investment fund is considered separately in evaluating carried interest and potential giveback obligations. See Note 8,
Commitments and Contingencies, to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-
K for additional information.
Accrued performance allocations and accrued giveback obligations at a point in time assume a hypothetical liquidation
of the funds’ investments at their then current fair values. Each investment fund is considered separately in evaluating carried
interest and potential giveback obligations. These assets and liabilities will continue to fluctuate in accordance with the fair
values of the funds’ investments until they are realized. The Company uses “net accrued performance revenues” to refer to the
aggregation of the accrued performance allocations net of (i) accrued giveback obligations, (ii) accrued performance allocations
related compensation, (iii) performance allocations related tax obligations, and (iv) accrued performance allocations attributable
to non-controlling interests. Net accrued performance revenues exclude any net accrued performance allocations and incentive
fees that have been realized but will be collected in subsequent periods, as well as net accrued performance revenues which are
presented as fee related performance revenues when realized in our non-GAAP financial measures. Realized performance
allocation-related compensation associated with our updated compensation program that has not yet been paid is also excluded
from our net accrued performance allocations.
In addition, realized performance allocations may be reversed in future periods to the extent that such amounts become
subject to a giveback obligation. The aggregate amount of giveback obligations realized since Carlyle’s inception totaled
$256.5 million, $175.0 million of which was related to various Legacy Energy Funds. Given that current and former senior
Carlyle professionals and other limited partners of the Carlyle Holdings partnerships are responsible for paying the majority of
the realized giveback obligation, only $86.5 million of the $256.5 million aggregate giveback obligation realized since
inception was attributable to Carlyle. The realization of giveback obligations for the Company’s portion of such obligations
reduces Distributable Earnings in the period realized. Further, each individual who holds equity interests in carried interest
generated by our funds and is a recipient of realized carried interest typically signs a guarantee agreement or partnership
agreement that personally obligates such person to return his/her pro rata share of any amounts of realized carried interest
previously distributed that are later clawed back. Accordingly, carried interest as performance allocation compensation is
subject to return to the Company in the event a giveback obligation is funded. Generally, the actual giveback liability, if any,
does not become due until the end of a fund’s life.
In addition, in our discussion of our non-GAAP results, we use the term “realized net performance revenues” to refer
to realized performance allocations and incentive fees from our funds, net of the portion allocated to our investment
professionals, and other employees and certain tax expenses associated with carried interest attributable to certain partners and
employees, which are reflected as realized performance allocations and incentive fees related compensation expense. See “—
Non-GAAP Financial Measures” and “—Segment Analysis” for the amount of realized net performance revenues recognized
each period and related discussion.
Investment income also represents the realized and unrealized gains and losses on our principal investments, including
our investments in Carlyle funds that are not consolidated, and our strategic investments in NGP as described below. Realized
principal investment income (loss) is recorded when we redeem all or a portion of our investment or when we receive or are due
cash income, such as dividends or distributions. A realized principal investment loss is also recorded when an investment is
deemed to be worthless. Unrealized principal investment income (loss) results from changes in the fair value of the underlying
investment, as well as the reversal of previously recognized unrealized gains (losses) at the time an investment is realized.
We account for our investments in NGP under the equity method of accounting. Our investments in NGP include the
equity interests in NGP Management Company, L.L.C. (“NGP Management”) and the general partners of certain carry funds
advised by NGP. These interests entitle us to an allocation of income equal to 55.0% of the management fee related revenues of
NGP Management, which serves as the investment advisor to certain NGP funds, as well as 47.5% (40.0% or 42.75% in the
case of certain funds) of the performance allocations that NGP receives from the NGP Carry Funds. We record investment
income (loss) for our equity income allocation from NGP management fee related revenues and our share of any allocated
expenses from NGP Management, as well as expenses associated with the compensatory elements of the strategic investment.
We also record our equity income allocation from NGP performance allocations in principal investment income (loss) from
equity method investments rather than performance allocations in our consolidated statements of operations. We do not control
or manage NGP. Moreover, we do not operate NGP’s business, have representation on NGP’s board or serve as an investment
advisor to any investment fund sponsored by NGP, nor do we direct the operations of any of NGP portfolio companies. While
we have consent rights over certain major actions by NGP outside of the ordinary course of NGP’s business (including, for
example, consent rights over items such as amendments to the organizational documents of the entity in which we are invested,
changes to the management fee streams earned by NGP under its fund agreements, or the incurrence of certain debt by NGP
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and other similar items), we have no voting rights or consent rights on any NGP investment committee that selects investments
to be made by NGP funds. For further information regarding our strategic investments in NGP, refer to Note 4, Investments, to
the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Interest and other income. Interest and other income primarily represents reimbursement of certain costs incurred on
behalf of our funds, as well as interest income that we earn such as from our cash and money market accounts and other
investments, including CLO senior and subordinated notes.
Interest and other income of Consolidated Funds. Interest and other income of Consolidated Funds primarily
represents the interest earned on assets of consolidated CLOs.
Net investment income (loss) of Consolidated Funds. Net investment income (loss) of Consolidated Funds generally
measures the change in the difference in fair value between the assets and the liabilities of the Consolidated Funds. Income
(loss) indicates that the fair value of the assets of the Consolidated Funds appreciated more (less), or depreciated less (more),
than the fair value of the liabilities of the Consolidated Funds. Income or loss is not necessarily indicative of the investment
performance of the Consolidated Funds and does not impact the management or incentive fees received by Carlyle for its
management of the Consolidated Funds. The portion of the net investment income (losses) of Consolidated Funds attributable
to the limited partner investors is allocated to non-controlling interests. Therefore, income or loss is not expected to have a
material impact on the revenues or profitability of the Company. Moreover, although the assets of the Consolidated Funds are
consolidated onto our balance sheet pursuant to U.S. GAAP, ultimately we do not have recourse to such assets and such
liabilities are generally non-recourse to us. Therefore, income or loss from the Consolidated Funds generally does not impact
the assets available to our common stockholders.
Expenses
Compensation and benefits. Compensation includes salaries, bonuses, equity-based compensation, and performance
payment arrangements. Bonuses are accrued over the service period to which they relate.
We recognize as compensation expense the portion of performance allocations and incentive fees that are due to our
employees, senior Carlyle professionals, advisors, and operating executives in a manner consistent with how we recognize the
performance allocations and incentive fee revenue. These amounts are accounted for as compensation expense in conjunction
with the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of the accrued
compensation and benefits liability. Compensation in respect of performance allocations and incentive fees is paid when the
related performance allocations and incentive fees are realized, and not when such performance allocations and incentive fees
are accrued. The funds do not have a uniform allocation of performance allocations and incentive fees to our employees, senior
Carlyle professionals, advisors, and operating executives. However, subsequent to the updates made to our compensation
strategy effective December 31, 2023, we generally allocate a range of 60% to 70% of performance allocations and incentive
fees to our employees. As a result, the portion of performance allocations and incentive fees paid as compensation has increased
and cash-based compensation and benefits has decreased in 2024 compared to the prior period.
In addition, we have implemented various equity-based compensation arrangements that require senior Carlyle
professionals and other employees to provide services over a service period of generally one year to four years in order to vest
in the applicable equity interests, which under U.S. GAAP will result in compensation charges over current and future periods.
In certain of our equity-based compensation arrangements, vesting is based on the achievement of certain performance targets
or market conditions. See Note 14, Equity-Based Compensation, to the consolidated financial statements in Part II, Item 8 of
this Annual Report on Form 10-K for additional information. Compensation charges associated with all equity-based
compensation grants are excluded from Fee Related Earnings and Distributable Earnings.
We may hire additional individuals and overall compensation levels may correspondingly increase, which could result
in an increase in compensation and benefits expense. As a result of prior acquisitions, we have charges associated with
contingent consideration taking the form of earn-outs and profit participation, some of which are reflected as compensation
expense.
General, administrative and other expenses. General, administrative and other expenses include occupancy and
equipment expenses and other expenses, which consist principally of professional fees, including those related to our global
regulatory compliance program, external costs of fundraising, travel and related expenses, communications and information
services, depreciation and amortization (including intangible asset amortization and impairment), bad debt expense, and foreign
currency transactions. We expect that general, administrative and other expenses will vary due to infrequently occurring or
unusual items, such as impairment of intangible assets or lease right-of-use assets and expenses or insurance recoveries
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associated with litigation and contingencies. Also, in periods of significant fundraising, to the extent that we use third parties to
assist in our fundraising efforts, our general, administrative and other expenses may increase accordingly. Similarly, our
general, administrative and other expenses may increase as a result of professional and other fees incurred as part of due
diligence related to strategic acquisitions and new product development. Additionally, we anticipate that general, administrative
and other expenses will fluctuate from period to period due to the impact of foreign exchange transactions.
Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds consist
primarily of interest expense related primarily to loans of consolidated CLOs, professional fees and other third-party expenses.
Income taxes. Income taxes are accounted for using the asset and liability method of accounting. Under this method,
deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying
amounts of assets and liabilities and their respective tax basis, using currently enacted tax rates. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted. Deferred tax
assets are reduced by a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be
realized.
Non-controlling Interests in Consolidated Entities. Non-controlling interests in consolidated entities represent the
component of equity in consolidated entities not held by us. These interests are adjusted for general partner allocations.
Earnings Per Common Share. We compute earnings per common share in accordance with ASC 260, Earnings Per
Share. Basic earnings per common share is calculated by dividing net income (loss) attributable to the common shares of the
Company by the weighted average number of common shares outstanding for the period. Diluted earnings per common share
reflects the assumed conversion of all dilutive securities. See Note 12, Earnings Per Common Share, to the consolidated
financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Non-GAAP Financial Measures
Distributable Earnings. Distributable Earnings, or “DE,” is a key performance benchmark used in our industry and is
evaluated regularly in making resource deployment and compensation decisions, and in assessing the performance of our three
segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that
reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure
that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without
the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional
measure to assess performance.
Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S.
GAAP in that it includes certain tax expenses associated with certain foreign performance revenues (composed of performance
allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense,
unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle
interest in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items that affect
period-to-period comparability and are not reflective of the Company’s operational performance. Charges (credits) related to
Carlyle corporate actions and non-recurring items include: charges associated with the Conversion, charges associated with
acquisitions, dispositions, or strategic investments, changes in the tax receivable agreement liability, amortization and any
impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions,
charges associated with earn-outs and contingent consideration including gains and losses associated with the estimated fair
value of contingent consideration issued in conjunction with acquisitions or strategic investments, impairment charges
associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract
terminations and employee severance, and certain general, administrative and other expenses when the timing of any future
payment is uncertain, and non-recurring items that affect period-to-period comparability and are not reflective of the
Company’s operating performance. We believe the inclusion or exclusion of these items provides investors with a meaningful
indication of our core operating performance. This measure supplements and should be considered in addition to and not in lieu
of the results of operations discussed further under “—Consolidated Results of Operations” prepared in accordance with U.S.
GAAP.
Fee Related Earnings. Fee Related Earnings, or “FRE,” is a component of DE and is used to assess the ability of the
business to cover base compensation and operating expenses from total fee revenues. FRE adjusts DE to exclude net realized
performance revenues, realized principal investment income from investments in Carlyle funds, and net interest (interest
income less interest expense). Fee Related Earnings includes fee related performance revenues and related compensation
expense, which is generally approximately 45% of fee related performance revenues. Fee related performance revenues
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represent the realized portion of performance revenues that are measured and received on a recurring basis, are not dependent
on realization events, and which have no risk of giveback.
Operating Metrics
We monitor certain operating metrics that are common to the asset management industry.
Fee-earning Assets under Management. Fee-earning assets under management or Fee-earning AUM refers to the
assets we manage or advise from which we derive recurring fund management fees. Our Fee-earning AUM is generally based
on one of the following, once fees have been activated:
(a)the amount of limited partner capital commitments, generally for carry funds where the original investment period
has not expired and for AlpInvest carry funds during the commitment fee period (see “Fee-earning AUM based on
capital commitments” in the table below for the amount of this component at each period);
(b)the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-
investment vehicles where the original investment period has expired (see “Fee-earning AUM based on invested
capital” in the table below for the amount of this component at each period);
(c)the amount of aggregate fee-earning collateral balance at par of our CLOs and other securitization vehicles, as
defined in the fund indentures (pre-2020 CLO vintages are generally exclusive of equities and defaulted positions)
as of the quarterly cut-off date;
(d)the external investor portion of the net asset value of certain carry funds (see “Fee-earning AUM based on net
asset value” in the table below for the amount of this component at each period);
(e)the fair value of Fortitude’s general account assets invested under the strategic advisory services agreement (see
“Fee-earning AUM based on fair value and other” in the table below);
(f)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our
business development companies and certain carry funds (included in “Fee-earning AUM based on lower of cost
or fair value and other” in the table below); and
(g)the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee
period has expired and certain carry funds where the investment period has expired, (included in “Fee-earning
AUM based on lower of cost or fair value and other” in the table below).
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The chart below presents Fee-earning AUM by segment at each period, in billions.
The table below details Fee-earning AUM by its respective components at each period.
As of December 31, | |||
2024 | 2023 | ||
Consolidated Results | (Dollars in millions) | ||
Components of Fee-earning AUM | |||
Fee-earning AUM based on capital commitments | $58,885 | $71,920 | |
Fee-earning AUM based on invested capital | 81,826 | 69,371 | |
Fee-earning AUM based on collateral balances, at par | 45,890 | 49,999 | |
Fee-earning AUM based on net asset value | 23,369 | 19,537 | |
Fee-earning AUM based on fair value and other | 94,388 | 96,591 | |
Balance, End of Period(1) | $304,358 | $307,418 | |
(1)Ending balances as of December 31, 2024 and 2023 exclude $22.8 billion and $15.3 billion, respectively, of pending Fee-earning AUM
for which fees have not yet been activated.
The table below provides the period to period rollforward of Fee-earning AUM.
Year Ended December 31, | |||
2024 | 2023 | ||
Consolidated Results | (Dollars in millions) | ||
Fee-earning AUM Rollforward | |||
Balance, Beginning of Period | $307,418 | $266,577 | |
Inflows(1) | 32,971 | 55,531 | |
Outflows (including realizations)(2) | (31,289) | (18,329) | |
Market Activity & Other(3) | (1,856) | 2,873 | |
Foreign Exchange(4) | (2,886) | 766 | |
Balance, End of Period | $304,358 | $307,418 | |
(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on
commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based
on invested capital, the fee-earning collateral balance of new CLO issuances, closed reinsurance transactions at Fortitude, as well as
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gross subscriptions in vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the
period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM. Inflows for the year ended
December 31, 2023 include $26 billion of Fee-earning AUM related to closed reinsurance transactions at Fortitude.
(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair
value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has
expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and outflows
from our liquid credit products. Distributions for funds earning management fees based on commitments during the period do not affect
Fee-earning AUM.
(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower
of cost or fair value and net asset value, activity of funds with fees based on gross asset value, and changes in the fair value of Fortitude’s
general account assets covered by the strategic advisory services agreement.
(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated
funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the
period end.
Refer to “—Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for
each of the periods presented by segment.
Assets under Management. Assets under management or “AUM” refers to the assets we manage or advise. Our AUM
generally equals the sum of the following:
(a) the aggregate fair value of our carry funds and related co-investment vehicles, and separately managed accounts, plus
the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to
those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital
commitments to those funds and vehicles;
(b) the amount of aggregate collateral balance and principal cash at par or aggregate principal amount of the notes of our
CLOs and other structured products (inclusive of all positions);
(c) the net asset value of certain carry funds;
(d)the fair value of Fortitude’s general account assets invested under the strategic advisory services agreement; and
(e) the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that
Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those
vehicles.
The chart below presents Total AUM by segment at each period, in billions.
We include in our calculation of AUM and Fee-earning AUM the NGP Energy Funds that are advised by NGP. Our
calculation of AUM also includes third-party capital raised for the investment in Fortitude through a Carlyle-affiliated
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investment fund and from strategic investors who directly invest in Fortitude alongside the fund. The AUM and Fee-earning
AUM related to the strategic advisory services agreement with Fortitude is inclusive of the net asset value of investments in
Carlyle products. These amounts are also reflected in the AUM and Fee-earning AUM of the strategy in which they are
invested.
For most of our Global Private Equity and Global Investment Solutions carry funds, total AUM includes the fair value
of the capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of
invested capital, depending on whether the original investment period for the fund has expired. As such, Fee-earning AUM may
be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments.
Our calculations of AUM and Fee-earning AUM may differ from the calculations of other asset managers. As a result,
these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of
AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment
funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management
fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or
Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.
We generally use Fee-earning AUM as a metric to measure changes in the assets from which we earn recurring
management fees. Total AUM tends to be a better measure of our investment and fundraising performance as it reflects
investments at fair value plus available capital.
The table below provides the period to period rollforward of Total AUM.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Consolidated Results | |||
Total AUM Rollforward | |||
Balance, Beginning of Period | $425,994 | $372,691 | |
Inflows(1) | 40,781 | 63,466 | |
Outflows (including realizations)(2) | (36,575) | (25,880) | |
Market Activity & Other(3) | 15,220 | 13,563 | |
Foreign Exchange(4) | (4,400) | 2,154 | |
Balance, End of Period | $441,020 | $425,994 | |
(1)Inflows generally reflects the impact of gross fundraising as well as closed reinsurance transactions at Fortitude and corporate
acquisitions during the period, if any. For funds or vehicles denominated in foreign currencies, this reflects translation at the average
quarterly rate. Inflows for the year ended December 31, 2023 include $26 billion of AUM related to closed reinsurance transactions at
Fortitude.
(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately
managed accounts, gross redemptions in our open-end funds, outflows from our liquid credit products, and the expiration of available
capital.
(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and
related co-investment vehicles, and separately managed accounts, as well as the net impact of fees, expenses and non-investment income,
change in gross asset value for our business development companies, changes in the fair value of Fortitude’s general account assets
covered by the strategic advisory services agreement, and other changes in AUM.
(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated
funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the
period end.
Please refer to “—Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for
each of the periods presented.
Available Capital. “Available Capital” refers to the amount of capital commitments available to be called for
investments, which may be reduced for equity invested that is funded via a fund credit facility and expected to be called from
investors at a later date, plus any additional assets/liabilities at the fund level other than active investments. Amounts previously
called may be added back to available capital following certain distributions. “Expired Available Capital” occurs when a fund
has passed the investment and follow-on periods and can no longer invest capital into new or existing deals. Any remaining
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Available Capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that
are not drawn, can only be called for fees and expenses and is therefore removed from the Total AUM calculation.
Perpetual Capital. “Perpetual Capital” refers to the assets we manage or advise which have an indefinite term and for
which there is no immediate requirement to return capital to investors upon the realization of investments made with such
capital, except as required by applicable law. Perpetual Capital may be materially reduced or terminated under certain
conditions, including reductions from changes in valuations and payments to investors, including through elections by investors
to redeem their investments, dividend payments, and other payment obligations, as well as the termination of or failure to renew
the respective investment advisory agreements. Perpetual Capital includes: (a) assets managed under the strategic advisory
services agreement with Fortitude, (b) our Core Plus real estate fund, (c) our business development companies and certain other
direct lending products, (d) Carlyle Tactical Private Credit Fund (“CTAC”), (e) our closed-end tender offer Carlyle AlpInvest
Private Markets (“CAPM”) funds, and (f) certain other structured credit products. As of December 31, 2024, our total AUM
and Fee-earning AUM included $93.9 billion and $91.1 billion, respectively, of Perpetual Capital.
Performance Fee Eligible AUM. “Performance Fee Eligible AUM” represents the AUM of funds for which we are
entitled to receive performance allocations, inclusive of the fair value of investments in those funds (which we refer to as
“Performance Fee Eligible Fair Value”) and their Available Capital. Performance Fee Eligible Fair Value is “Performance Fee-
Generating” when the associated fund has achieved the specified investment returns required under the terms of the fund’s
agreement and is accruing performance revenue as of the quarter-end reporting date. Funds whose performance allocations are
treated as fee related performance revenues are excluded from these metrics. As of December 31, 2024, our total AUM included
$229.2 billion of Performance Fee Eligible AUM.
Consolidation of Certain Carlyle Funds
The Company consolidates all entities that it controls either through a majority voting interest or as the primary
beneficiary of variable interest entities. The entities we consolidate are referred to collectively as the Consolidated Funds in our
consolidated financial statements. As of December 31, 2024, our Consolidated Funds represent approximately 2% of our AUM;
1% of our management fees; and 1% of our total investment income or loss on an unconsolidated basis for the year ended
December 31, 2024.
We are not required under the consolidation guidance to consolidate in our financial statements most of the investment
funds we advise. However, we consolidate certain CLOs and certain other funds that we advise. As of December 31, 2024, the
assets and liabilities of the Consolidated Funds were primarily related to our consolidated CLOs, which held approximately
$7.9 billion of total assets. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities
and, as a result, the liabilities of the Consolidated Funds are non-recourse to us.
Generally, the consolidation of the Consolidated Funds has a gross-up effect on our assets, liabilities and cash flows
but has no net effect on the net income attributable to the Company and equity. The majority of the net economic ownership
interests of the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the consolidated
financial statements.
The Consolidated Funds are not the same entities in all periods presented. The Consolidated Funds in future periods
may change due to changes in fund terms, formation of new funds, and terminations of funds. Because only a small portion of
our funds are consolidated, the performance of the Consolidated Funds is not necessarily consistent with or representative of the
combined performance trends of all of our funds.
For further information on our consolidation policy and the consolidation of certain funds, see Note 2, Summary of
Significant Accounting Policies, to the consolidated financial statements included in this Annual Report on Form 10-K.
Consolidated Results of Operations
The following table and discussion sets forth information regarding our consolidated results of operations for the years
ended December 31, 2024 and 2023. Our consolidated financial statements have been prepared on substantially the same basis
for all historical periods presented; however, the consolidated funds are not the same entities in all periods shown due to
changes in fund terms and the creation and termination of funds. As further described above, the consolidation of these funds
primarily has the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of
Consolidated Funds, and net investment income (losses) of Consolidated Funds in the year that the fund is initially
consolidated. The consolidation of these funds had no effect on net income attributable to the Company for the periods
presented.
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Year Ended December 31, | Change | ||||||
2024 | 2023 | $ | % | ||||
(Dollars in millions) | |||||||
Revenues | |||||||
Fund management fees | $2,188.1 | $2,043.2 | $144.9 | 7% | |||
Incentive fees | 133.5 | 93.7 | 39.8 | 42% | |||
Investment income | |||||||
Performance allocations | 2,015.7 | (88.6) | 2,104.3 | NM | |||
Principal investment income | 238.7 | 133.4 | 105.3 | 79% | |||
Total investment income | 2,254.4 | 44.8 | 2,209.6 | NM | |||
Interest and other income | 218.2 | 212.1 | 6.1 | 3% | |||
Interest and other income of Consolidated Funds | 631.6 | 570.1 | 61.5 | 11% | |||
Total revenues | 5,425.8 | 2,963.9 | 2,461.9 | 83% | |||
Expenses | |||||||
Compensation and benefits | |||||||
Cash-based compensation and benefits | 875.5 | 1,023.7 | (148.2) | (14)% | |||
Equity-based compensation | 467.9 | 249.1 | 218.8 | 88% | |||
Performance allocations and incentive fee related compensation | 1,361.5 | 1,103.7 | 257.8 | 23% | |||
Total compensation and benefits | 2,704.9 | 2,376.5 | 328.4 | 14% | |||
General, administrative and other expenses | 665.6 | 652.1 | 13.5 | 2% | |||
Interest | 121.0 | 123.8 | (2.8) | (2)% | |||
Interest and other expenses of Consolidated Funds | 564.9 | 419.1 | 145.8 | 35% | |||
Other non-operating expenses (income) | (0.3) | 0.2 | (0.5) | NM | |||
Total expenses | 4,056.1 | 3,571.7 | 484.4 | 14% | |||
Other income (loss) | |||||||
Net investment income of Consolidated Funds | 24.0 | 6.9 | 17.1 | 248% | |||
Income (loss) before provision for income taxes | 1,393.7 | (600.9) | 1,994.6 | NM | |||
Provision (benefit) for income taxes | 302.6 | (104.2) | 406.8 | NM | |||
Net income (loss) | 1,091.1 | (496.7) | 1,587.8 | NM | |||
Net income attributable to non-controlling interests in consolidated entities | 70.7 | 111.7 | (41.0) | (37)% | |||
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders | $1,020.4 | $(608.4) | $1,628.8 | NM | |||
NM - Not meaningful.
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Revenues
Fund management fees. Fund management fees increased $144.9 million, or 7%, for the year ended December 31,
2024 compared to 2023, primarily due to the following:
Year Ended December 31, | |
2024 v. 2023 | |
(Dollars in millions) | |
Higher management fees from the commencement of the investment period for certain newly raised funds which charge fees based on commitments and the impact of incremental fundraising in funds which activated fees in a prior period | $121.5 |
Lower management fees resulting from the change in basis from commitments to invested capital and step-downs in rate for certain funds, and the impact of net investment activity in funds whose management fees are based on invested capital, including the impact of changes in the base under the strategic advisory services agreement with Fortitude | (54.3) |
Decrease in catch-up management fees from subsequent closes of funds that are in the fundraising period | (3.9) |
Higher transaction and portfolio advisory fees | 83.9 |
All other changes | (2.3) |
Total increase in Fund management fees(1) | $144.9 |
(1)Total increase in Fund management fees does not include our equity income allocation from NGP management fee related revenues. We
do not control NGP and account for our strategic investment in NGP as an equity method investment under U.S. GAAP. Therefore, Fund
management fees associated with NGP are included in Principal investment income (loss) in our U.S. GAAP results.
Management fees attributable to Carlyle Partners VIII, L.P. (“CP VIII”), our eighth U.S. buyout fund, were
approximately 11% of fund management fees recognized during the year ended December 31, 2023. No other fund generated
over 10% of total management fees in the periods presented. Average Fee-earning assets under management in our Global
Credit and Global Investment Solutions segments in 2024 grew approximately 19% and 21%, respectively, relative to the
average balances in 2023, while average Fee-earning assets under management in 2024 for Global Private Equity fell by 4%
relative to the average balance in 2023. As a result, Fund management fees increased in Global Credit and Global Investment
Solutions and decreased in Global Private Equity, due in part to smaller buyout fund sizes in our corporate private equity
strategy and step downs in rate or basis, particularly a step-down in management fee rate in CP VII at the beginning of 2024.
Fund management fees included transaction and portfolio advisory fees, net of rebate offsets, of $152.5 million and
$68.6 million for the years ended December 31, 2024 and 2023, respectively. These fees primarily comprise capital market fees
generated by Carlyle Global Capital Markets. The recognition of portfolio advisory fees, transactions fees, and capital markets
fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our
investment pace. See “—Trends Affecting Our Business” for further discussion on our investment activity and broader market
trends.
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Investment income. Investment income increased $2.2 billion for the year ended December 31, 2024 compared to
2023, which included an increase in Performance allocations of $2.1 billion and an increase in Principal investment income
(loss) of $0.1 billion. The components of Investment income are included in the following table:
Year Ended December 31, | Change | ||||||
2024 | 2023 | $ | % | ||||
(Dollars in millions) | |||||||
Performance allocations | $2,015.7 | $(88.6) | $2,104.3 | NM | |||
Principal investment income: | |||||||
Investment income from NGP, which includes performance allocations | 103.6 | 138.3 | (34.7) | (25)% | |||
Investment income from our carry funds: | |||||||
Global Private Equity | 35.3 | 16.4 | 18.9 | 115% | |||
Global Credit | 12.3 | 10.7 | 1.6 | 15% | |||
Global Investment Solutions | 25.7 | 19.2 | 6.5 | 34% | |||
Investment income from our CLOs | 23.0 | 21.3 | 1.7 | 8% | |||
Investment income (loss) from Carlyle FRL | 33.8 | (100.7) | 134.5 | NM | |||
Investment (loss) income from our other Global Credit products | (4.8) | 34.3 | (39.1) | NM | |||
Investment income on foreign currency hedges | 4.0 | 2.0 | 2.0 | 100% | |||
All other investment income (loss) | 5.8 | (8.1) | 13.9 | NM | |||
Total Principal investment income | 238.7 | 133.4 | 105.3 | 79% | |||
Total Investment income | $2,254.4 | $44.8 | $2,209.6 | NM | |||
Performance allocations. Performance allocations by segment for years ended December 31, 2024 and 2023
comprised the following:
Year Ended December 31, | Change | ||||||
2024 | 2023 | $ | % | ||||
(Dollars in millions) | |||||||
Global Private Equity | $1,559.9 | $(551.5) | $2,111.4 | NM | |||
Global Credit | 227.7 | 163.7 | 64.0 | 39% | |||
Global Investment Solutions | 228.1 | 299.2 | (71.1) | (24)% | |||
Total performance allocations | $2,015.7 | $(88.6) | $2,104.3 | NM | |||
Performance allocations for the year ended December 31, 2024 included:
•In the Global Private Equity segment, Performance allocation accruals were primarily driven by appreciation in
CP VII, and to a lesser extent appreciation in CP VIII, partially offset by the reversal of Performance allocation
accruals in CEP V reflecting portfolio depreciation.
•In the Global Credit segment, Performance allocation accruals were primarily driven by appreciation in
opportunistic credit funds.
•In the Global Investment Solutions segment, Performance allocation accruals were primarily driven by
appreciation in secondaries & portfolio finance and co-investment funds.
Performance allocations for the year ended December 31, 2023 included:
•In the Global Private Equity segment, the reversal of Performance allocations were primarily driven by CP VII, as
preferred returns outpaced portfolio appreciation, and the impact of portfolio depreciation in CP VI.
•In the Global Credit segment, Performance allocation accruals were primarily driven by portfolio appreciation in
our opportunistic credit funds.
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•In the Global Investment Solutions segment, Performance allocation accruals were primarily driven by our
secondaries & portfolio finance and co-investment strategies.
Principal investment income. The increase in Principal investment income for the year ended December 31, 2024
compared to 2023 was primarily due to an investment loss of $104.0 million during the year ended December 31, 2023 related
to our equity method investment in Carlyle FRL (see Note 4, Investments, to the consolidated financial statements in Item 8 of
this Annual Report on Form 10-K for more information). This was partially offset by a decrease in investment income in our
other Global Credit products related to a $45.5 million reversal of previously recorded unrealized investment income on our
investment in the BDC Preferred Shares due to the proposed merger between CSL and another Carlyle-advised BDC, which we
expect will result in higher fund management fees in CSL in future periods (refer to Note 9, Related Party Transactions, to the
consolidated financial statements for more information). The increase in Principal investment income was further offset by a
decrease investment income related to our equity method investment in the general partners of certain carry funds advised by
NGP. In addition, Other investment income in the year ended December 31, 2023 included an unrealized investment loss of
$13.3 million associated with the remeasurement of a corporate investment in equity securities, which was previously carried at
cost, resulting from an observable price change pursuant to ASC 321, Investments–Equity Securities.
Interest and other income of Consolidated Funds. Interest and other income of Consolidated Funds increased $61.5
million for the year ended December 31, 2024 as compared to 2023. Substantially all of the increase in interest and other
income of Consolidated Funds relates to increased interest income from consolidated CLOs. Our CLOs generate interest
income primarily from investments in bonds and loans, inclusive of amortization of discounts and generate other income from
consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together
with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’
limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the
Company.
Expenses
Compensation and benefits. Total compensation and benefits increased $328.4 million for the year ended
December 31, 2024 compared to 2023, driven by an increase in Performance allocations and incentive fee related compensation
of $257.8 million and an increase in Equity-based compensation of $218.8 million, partially offset by a decrease in Cash-based
compensation and benefits of $148.2 million.
Cash-based compensation and benefits. The decrease in Cash-based compensation and benefits was primarily due to
the updates to our compensation program under which we pay a greater portion of compensation from performance allocations.
The decrease was partially offset by an increase in headcount as well as incentive compensation related to capital markets fees.
Equity-based compensation. The increase in Equity-based compensation was primarily due to an increase in grants of
restricted stock units for the year ended December 31, 2024 compared to 2023. In February 2024, we granted 18.1 million
restricted stock units, including 13.2 million restricted stock units granted that are subject to vesting based on the achievement
of stock price performance conditions over a service period of three years. The grant date fair value of the awards subject to
stock price performance conditions was approximately $347 million and the year ended December 31, 2024 includes
$201.6 million of equity-based compensation expense related to these awards. Equity-based compensation related to these
awards will decline in 2025 as the recognition of expense for these awards is more heavily weighted to the earlier years of the
service period. Such expense is incurred regardless of whether the stock price performance conditions are achieved. During the
year ended December 31, 2024, stock price performance conditions were achieved for the first tranche of 4.3 million
performance-based restricted stock units granted in February 2024, which vested in February 2025. In February 2023, we
granted a total of 9.9 million restricted stock units to our personnel, as well as an aggregate 6.8 million of time- and
performance-based inducement equity awards in connection with the appointment of our Chief Executive Officer.
Performance allocations and incentive fee related compensation. The increase in Performance allocations and
incentive fee related compensation expense was primarily driven by the impact of the increase in Performance allocations, on
which Performance allocations and incentive fee related compensation is based, partially offset by a one-time $1.1 billion
charge in 2023 related to the updated employee compensation program effective December 31, 2023, which increased the
proportion of performance allocations revenue that will be used to compensate employees.
General, administrative and other expenses. General, administrative and other expenses increased $13.5 million for
the year ended December 31, 2024 compared to 2023, primarily driven by an increase in partnership expenses paid by the
Company on behalf of the Carlyle funds of $11.8 million, an increase in liabilities for litigation-related contingencies,
regulatory examination and inquiries, and other matters of $8.5 million, as well as increases in external finders fees and office-
117
related costs. These increases were partially offset by a decrease in foreign currency remeasurement adjustments of $16.2
million, reflecting the impact of remeasurement gains on unrealized performance allocations at certain AlpInvest subsidiaries
during the year ended December 31, 2024, as well as the benefit of lower value-added tax (“VAT”) expense in Asia and lower
travel and entertainment expense.
Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased
$145.8 million for the year ended December 31, 2024 as compared to 2023, primarily due to higher interest expense on the
consolidated CLOs. The CLOs incur interest expense on their loans payable and incur other expenses consisting of trustee fees,
rating agency fees and professional fees. Substantially all interest and other income of our CLOs together with interest expense
of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or
CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.
Net investment income (loss) of Consolidated Funds. The table below summarizes the components of Net investment
income (loss) of Consolidated Funds, including our consolidated CLOs and certain other funds:
Year Ended December 31, | Change | ||||||
2024 | 2023 | $ | % | ||||
(Dollars in millions) | |||||||
Net realized losses | $(60.7) | $(80.8) | $20.1 | (25)% | |||
Net change in unrealized gains | 157.1 | 327.7 | (170.6) | (52)% | |||
Total net gains | 96.4 | 246.9 | (150.5) | (61)% | |||
Losses from liabilities of CLOs | (72.4) | (240.0) | 167.6 | (70)% | |||
Total net investment income of Consolidated Funds | $24.0 | $6.9 | $17.1 | NM | |||
Provision (benefit) for income taxes. For the years ended December 31, 2024 and 2023, the Company’s provision
(benefit) for income taxes was $302.6 million and $(104.2) million, respectively, and the Company’s effective tax rates were
21.7% and 17.3%, respectively. The effective tax rate for the years ended December 31, 2024 and 2023 primarily comprises the
21% U.S. federal corporate income tax rate plus the impact of U.S. state and foreign corporate income tax provision (benefit)
and non-controlling interests. The effective tax rate for the year ended December 31, 2023 also differs from the statutory rate
due to a net tax provision from non-deductible restricted stock units.
As of December 31, 2024 and 2023, the Company had federal, state, local and foreign taxes payable of $46.2 million
and $46.9 million, respectively, which is recorded as a component of accounts payable, accrued expenses and other liabilities in
the accompanying consolidated balance sheets.
Net income (loss) attributable to non-controlling interests in consolidated entities. Net income attributable to non-
controlling interests in consolidated entities was $70.7 million and $111.7 million for the years ended December 31, 2024 and
2023, respectively. These amounts are primarily attributable to the net earnings of the Consolidated Funds for each period,
which are substantially all allocated to the related fund’s limited partners or CLO investors, as well as net earnings from our
Insurance Solutions business and certain other products that are allocated to certain third-party investors. The net income (loss)
of our Consolidated Funds, after eliminations, was $8.7 million and $82.6 million for the years ended December 31, 2024 and
2023, respectively. These amounts also reflect the net income attributable to non-controlling interests in carried interest,
giveback obligations, and cash held for carried interest distributions.
Non-GAAP Financial Measures
The following tables set forth information in the format used by management when making resource deployment
decisions and in assessing performance of our segments. These Non-GAAP financial measures are presented for the years
ended December 31, 2024 and 2023. Our Non-GAAP financial measures exclude the effects of unrealized performance
allocations net of related compensation expense, unrealized principal investment income, consolidated funds, acquisition and
disposition-related items including amortization and any impairment charges of acquired intangible assets and contingent
consideration taking the form of earn-outs, charges associated with the Conversion, impairment charges associated with lease
right-of-use assets, gains or losses from retirement of debt, charges associated with contract terminations and employee
severance, charges associated with equity-based compensation, changes in the tax receivable agreement liability, corporate
actions, and infrequently occurring or unusual events.
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The following table shows our total segment DE and FRE for the years ended December 31, 2024 and 2023.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Total Segment Revenues | $3,655.4 | $3,405.1 | |
Total Segment Expenses | 2,129.9 | 1,974.6 | |
(=) Distributable Earnings | $1,525.5 | $1,430.5 | |
(-) Realized Net Performance Revenues | 366.1 | 531.0 | |
(-) Realized Principal Investment Income | 101.0 | 88.8 | |
(+) Net Interest | 46.2 | 48.7 | |
(=) Fee Related Earnings | $1,104.6 | $859.4 | |
The following table sets forth our total segment revenues for the years ended December 31, 2024 and 2023.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Segment Revenues | |||
Fund level fee revenues | |||
Fund management fees | $2,107.5 | $2,064.4 | |
Portfolio advisory and transaction fees, net and other | 163.6 | 80.4 | |
Fee related performance revenues | 132.7 | 161.0 | |
Total fund level fee revenues | 2,403.8 | 2,305.8 | |
Realized performance revenues | 1,075.9 | 938.3 | |
Realized principal investment income | 101.0 | 88.8 | |
Interest income | 74.7 | 72.2 | |
Total Segment Revenues | $3,655.4 | $3,405.1 | |
The following table sets forth our total segment expenses for the years ended December 31, 2024 and 2023.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Segment Expenses | |||
Compensation and benefits | |||
Cash-based compensation and benefits | $861.7 | $1,031.9 | |
Realized performance revenue related compensation | 709.8 | 407.3 | |
Total compensation and benefits | 1,571.5 | 1,439.2 | |
General, administrative, and other indirect expenses | 390.7 | 376.5 | |
Depreciation and amortization expense | 46.8 | 38.0 | |
Interest expense | 120.9 | 120.9 | |
Total Segment Expenses | $2,129.9 | $1,974.6 | |
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Income (loss) before provision for income taxes is the U.S. GAAP financial measure most comparable to Distributable
Earnings and Fee Related Earnings. The following table is a reconciliation of income (loss) before provision for income taxes to
Distributable Earnings and to Fee Related Earnings.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Income (loss) before provision for income taxes | $1,393.7 | $(600.9) | |
Adjustments: | |||
Net unrealized performance and fee related performance revenues | (396.7) | 1,659.2 | |
Unrealized principal investment (income) loss | (34.1) | (36.1) | |
Principal investment loss from dilution of indirect investment in Fortitude | — | 104.0 | |
Equity-based compensation(1) | 476.5 | 260.1 | |
Acquisition or disposition-related charges, including amortization of intangibles and impairment | 136.6 | 145.3 | |
Tax (expense) benefit associated with certain foreign performance revenues | (1.0) | (1.0) | |
Net income attributable to non-controlling interests in consolidated entities | (70.7) | (111.7) | |
Other adjustments(2) | 21.2 | 11.6 | |
(=) Distributable Earnings | 1,525.5 | 1,430.5 | |
(-) Realized net performance revenues, net of related compensation(3) | 366.1 | 531.0 | |
(-) Realized principal investment income(3) | 101.0 | 88.8 | |
(+) Net interest | 46.2 | 48.7 | |
(=) Fee Related Earnings | $1,104.6 | $859.4 | |
(1)Equity-based compensation for the years ended December 31, 2024 and 2023 includes amounts presented in principal investment
income and general, administrative and other expenses in our U.S. GAAP statement of operations.
(2)Includes charges (credits) related to Carlyle corporate actions and non-recurring items that affect period-to-period comparability
and are not reflective of the Company’s operating performance.
(3)See reconciliation to most directly comparable U.S. GAAP measure below:
Year Ended December 31, 2024 | |||||
Carlyle Consolidated | Adjustments(4) | Total Reportable Segments | |||
(Dollars in millions) | |||||
Performance revenues | $2,015.7 | $(939.8) | $1,075.9 | ||
Performance revenues related compensation expense | 1,361.5 | (651.7) | 709.8 | ||
Net performance revenues | $654.2 | $(288.1) | $366.1 | ||
Principal investment income (loss) | $238.7 | $(137.7) | $101.0 | ||
Year Ended December 31, 2023 | |||||
Carlyle Consolidated | Adjustments(4) | Total Reportable Segments | |||
(Dollars in millions) | |||||
Performance revenues | $(88.6) | $1,026.9 | $938.3 | ||
Performance revenues related compensation expense | 1,103.7 | (696.4) | 407.3 | ||
Net performance revenues | $(1,192.3) | $1,723.3 | $531.0 | ||
Principal investment income (loss) | $133.4 | $(44.6) | $88.8 | ||
(4)Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of
related compensation expense and unrealized principal investment income, which are excluded from our Non-GAAP results, (ii)
amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the
Non-GAAP results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the
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Non-GAAP results, (iv) the reclassification of NGP performance revenues, which are included in investment income in the U.S.
GAAP financial statements, (v) the reclassification of fee related performance revenues, which are included in fund level fee
revenues in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues.
Adjustments to principal investment income (loss) also include the reclassification of earnings for the investment in NGP
Management and its affiliates to the appropriate operating captions for the Non-GAAP results, and the exclusion of charges
associated with the investment in NGP Management and its affiliates that are excluded from the Non-GAAP results, and the
exclusion of the principal investment loss from dilution of the indirect investment in Fortitude (see Note 4, Investments, to the
consolidated financial statements).
Distributable Earnings for our reportable segments are as follows:
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Global Private Equity | $957.3 | $1,071.8 | |
Global Credit | 377.3 | 274.4 | |
Global Investment Solutions | 190.9 | 84.3 | |
Distributable Earnings | $1,525.5 | $1,430.5 | |
Segment Analysis
Discussed below is our DE and FRE for our segments for the periods presented. Our segment information is reflected
in the manner used by our chief operating decision maker to make operating and compensation decisions, assess performance,
and allocate resources.
For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated
Funds. As a result, segment revenues from management fees, realized performance revenues and realized principal investment
income (loss) are different than those presented on a consolidated U.S. GAAP basis because these revenues recognized in
certain segments are received from Consolidated Funds and are eliminated in consolidation when presented on a consolidated
U.S. GAAP basis. Furthermore, segment expenses are different than related amounts presented on a consolidated U.S. GAAP
basis due to the exclusion of fund expenses that are paid by the Consolidated Funds.
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Global Private Equity
The following table presents our results of operations for our Global Private Equity(1) segment:
Year Ended December 31, | Change | ||||||
2024 | 2023 | $ | % | ||||
(Dollars in millions) | |||||||
Segment Revenues | |||||||
Fund level fee revenues | |||||||
Fund management fees | $1,212.0 | $1,309.8 | $(97.8) | (7)% | |||
Portfolio advisory and transaction fees, net and other | 24.6 | 18.4 | 6.2 | 34% | |||
Fee related performance revenues | 6.9 | 68.3 | (61.4) | (90)% | |||
Total fund level fee revenues | 1,243.5 | 1,396.5 | (153.0) | (11)% | |||
Realized performance revenues | 927.2 | 805.1 | 122.1 | 15% | |||
Realized principal investment income | 49.7 | 45.3 | 4.4 | 10% | |||
Interest income | 28.1 | 31.6 | (3.5) | (11)% | |||
Total revenues | 2,248.5 | 2,278.5 | (30.0) | (1)% | |||
Segment Expenses | |||||||
Compensation and benefits | |||||||
Cash-based compensation and benefits | 422.8 | 583.8 | (161.0) | (28)% | |||
Realized performance revenues related compensation | 590.1 | 308.1 | 282.0 | 92% | |||
Total compensation and benefits | 1,012.9 | 891.9 | 121.0 | 14% | |||
General, administrative, and other indirect expenses | 195.2 | 221.9 | (26.7) | (12)% | |||
Depreciation and amortization expense | 26.8 | 26.0 | 0.8 | 3% | |||
Interest expense | 56.3 | 66.9 | (10.6) | (16)% | |||
Total expenses | 1,291.2 | 1,206.7 | 84.5 | 7% | |||
(=) Distributable Earnings | $957.3 | $1,071.8 | $(114.5) | (11)% | |||
(-) Realized Net Performance Revenues | 337.1 | 497.0 | (159.9) | (32)% | |||
(-) Realized Principal Investment Income | 49.7 | 45.3 | 4.4 | 10% | |||
(+) Net Interest | 28.2 | 35.3 | (7.1) | (20)% | |||
(=) Fee Related Earnings | $598.7 | $564.8 | $33.9 | 6% | |||
(1) For purposes of presenting our results of operations for this segment, our earnings from our investments in NGP are presented in the respective operating
captions.
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Distributable Earnings
Distributable Earnings decreased $114.5 million for the year ended December 31, 2024 as compared to 2023. The
following table provides the components of the changes in Distributable Earnings for the year ended December 31, 2024:
Year Ended December 31, | |
2024 v. 2023 | |
(Dollars in millions) | |
Distributable Earnings, December 31, 2023 | $1,071.8 |
Increases (decreases): | |
Increase in fee related earnings | 33.9 |
Decrease in realized net performance revenues | (159.9) |
Increase in realized principal investment income | 4.4 |
Decrease in net interest | 7.1 |
Total decrease | (114.5) |
Distributable Earnings, December 31, 2024 | $957.3 |
Realized Net Performance Revenues. Realized net performance revenues decreased $159.9 million for the year ended
December 31, 2024 as compared to 2023 despite a $122.1 million increase in realized performance revenues as realized
performance revenues related compensation increased disproportionately primarily as a result of the update to our compensation
and incentive plan that became effective December 31, 2023. For the year ended December 31, 2024, realized net performance
revenues of $337.1 million were primarily driven by CAP IV, CIEP, and CEOF II. For the year ended December 31, 2023,
realized net performance revenues of $497.0 million were primarily driven by NGP XII, our CEOF funds, CEP IV, and CP VI.
Fee Related Earnings
Fee Related Earnings increased $33.9 million for the year ended December 31, 2024 as compared to 2023. The
following table provides the components of the changes in Fee Related Earnings for the year ended December 31, 2024:
Year Ended December 31, | |
2024 v. 2023 | |
(Dollars in millions) | |
Fee Related Earnings, December 31, 2023 | $564.8 |
Increases (decreases): | |
Decrease in fee revenues | (153.0) |
Decrease in cash-based compensation and benefits | 161.0 |
Decrease in general, administrative and other indirect expenses | 26.7 |
All other changes | (0.8) |
Total increase | 33.9 |
Fee Related Earnings, December 31, 2024 | $598.7 |
Fee Revenues. Total fee revenues decreased $153.0 million for the year ended December 31, 2024 as compared to
2023, due to the following:
Year Ended December 31, | |
2024 v. 2023 | |
(Dollars in millions) | |
Lower fund management fees | $(97.8) |
Higher portfolio advisory and transaction fees, net and other | 6.2 |
Lower fee related performance revenues | (61.4) |
Total decrease in fee revenues | $(153.0) |
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The decrease in fund management fees for the year ended December 31, 2024 as compared to 2023 was primarily due
to the impact of investment realizations in funds on which management fees are based on invested capital, a step-down in
management fee rate in CP VII at the beginning of 2024 and a decrease in catch-up management fees primarily from CP VIII,
which completed fundraising in 2023. The impact of smaller buyout funds in our corporate private equity strategy is resulting
in, and may continue to result in, lower fund management fees relative to prior periods.
The decrease in fee related performance revenues for the year ended December 31, 2024 as compared to 2023 was
driven by CPI, which will fluctuate from year to year based on fund performance. The portion of these fees paid as
compensation are included in cash-based compensation and benefits expense. We do not expect material fee related
performance revenues in Global Private Equity for 2025.
Cash-based compensation and benefits expense. Cash-based compensation and benefits expense decreased $161.0
million, for the year ended December 31, 2024 as compared to 2023, primarily due to a decrease in the portion of bonuses
funded by fee earnings as a result of the updates to our compensation program effective as of December 31, 2023, which
resulted in a larger portion of compensation being derived from Realized performance revenues related compensation.
Additionally, the decrease was further impacted by a decrease in fee related performance compensation of $29.7 million.
General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased
$26.7 million for the year ended December 31, 2024 as compared to 2023, primarily due to lower professional fees and the
benefit of lower VAT expense in Asia.
Fee-earning AUM
Fee-earning AUM is presented below for each period together with the components of change during each respective
period.
The table below breaks out Fee-earning AUM by its respective components at each period.
As of December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Global Private Equity | |||
Components of Fee-earning AUM(1) | |||
Fee-earning AUM based on capital commitments | $34,484 | $52,172 | |
Fee-earning AUM based on invested capital | 52,998 | 44,524 | |
Fee-earning AUM based on net asset value | 7,348 | 6,877 | |
Fee-earning AUM based on lower of cost or fair value | 3,203 | 3,078 | |
Total Fee-earning AUM | $98,033 | $106,651 | |
Annualized Management Fee Rate(2) | 1.17% | 1.22% | |
(1)For additional information concerning the components of Fee-earning AUM, see “—Key Financial Measures—Operating Metrics.”
(2)Represents annualized fund management fees divided by the average of the beginning of year and each quarter end’s Fee-earning AUM
in the reporting period. Catch-up management fees were excluded in the calculation of the annualized fund management fees.
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The table below provides the period to period rollforward of Fee-earning AUM.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Global Private Equity | |||
Fee-earning AUM Rollforward | |||
Balance, Beginning of Period | $106,651 | $107,801 | |
Inflows(1) | 7,696 | 6,863 | |
Outflows (including realizations)(2) | (14,910) | (7,917) | |
Market Activity & Other(3) | (240) | (413) | |
Foreign Exchange(4) | (1,164) | 317 | |
Balance, End of Period | $98,033 | $106,651 | |
(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on
commitments were activated during the period, and the fee-earning commitments invested in vehicles for which management fees are
based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are
referenced as Pending Fee-earning AUM.
(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair
value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has
expired during the period, and reductions for funds that are no longer calling for fees. Realizations for funds earning management fees
based on commitments during the period do not affect Fee-earning AUM.
(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower
of cost or fair value.
(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated
funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the
period end.
Fee-earning AUM was $98.0 billion at December 31, 2024, a decrease of 8% compared to $106.7 billion at
December 31, 2023, as outflows and negative foreign exchange activity exceeded inflows for the period. Outflows of
$14.9 billion were driven by realizations in funds that charge fees on invested capital, as well as fee basis step-downs in CRP
IX, CAP V, and CEP V. Negative foreign exchange activity of $1.2 billion reflected the impact of a strengthening U.S. Dollar
on the translation of our EUR- and JPY-denominated funds to USD. Inflows of $7.7 billion included the activation of
management fees in CJP V and CAP VI and capital deployed in CPI. Investment and distribution activity has no impact for
funds still in the original investment period where Fee-earning AUM is based on commitments.
Total AUM
The table below provides the period to period rollforward of Total AUM.
Year Ended December 31, | |||
2024 | 2023 | ||
(Dollars in millions) | |||
Global Private Equity | |||
Total AUM Rollforward | |||
Balance, Beginning of Period | $161,308 | $163,098 | |
Inflows(1) | 12,695 | 8,759 | |
Outflows (including realizations)(2) | (16,314) | (14,375) | |
Market Activity & Other(3) | 7,533 | 3,073 | |
Foreign Exchange(4) | (1,689) | 753 | |
Balance, End of Period | $163,533 | $161,308 | |
(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects
translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual
closing.
(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately
managed accounts, gross redemptions in our open-ended funds, and the expiration of available capital.
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(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related
co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, and other
changes in AUM.
(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated
funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the
period end.
Total AUM was $163.5 billion at December 31, 2024, an increase of 1% compared to $161.3 billion at December 31,
2023, as inflows and market appreciation were largely offset by outflows and negative foreign exchange activity for the period.
Inflows of $12.7 billion reflected fundraising across the segment, notably in CRP X and CJP V. Market activity of $7.5 billion
was driven by appreciation in CP VII (15% appreciation for $3.4 billion), CP VIII (21% appreciation for $1.7 billion), and CRP
IX (17% appreciation for $0.6 billion), partially offset by depreciation in CEP V (-16% depreciation for $1.0 billion). Outflows
of $16.3 billion were driven by distributions across the segment, notably in the U.S. buyout, Asia buyout, NGP energy, Japan
buyout, and international energy funds. Negative foreign exchange activity of $1.7 billion reflected the impact of a
strengthening U.S. Dollar on the translation of our EUR- and JPY-denominated funds to USD.
Fund Performance Metrics
Fund performance information for our investment funds that generally have at least $1.0 billion in capital
commitments, cumulative equity invested or total value as of December 31, 2024, which we refer to as our “significant funds,”
is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods
presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The
Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The
Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other
existing and future funds will achieve similar returns. See Part I, Item 1A “Risk Factors—Risks Related to Our Business
Operations—Risks Related to the Assets We Manage—The historical returns attributable to our funds, including those
presented in this Annual Report on Form 10-K, should not be considered as indicative of the future results of our funds or of
our future results or of any returns expected on an investment in our common stock.”
The following tables reflect the performance of our significant funds in our Global Private Equity business. See Part I,
Item 1 “Business—Our Global Investment Offerings” for a legend of the fund acronyms listed below.
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(Amounts in millions) | TOTAL INVESTMENTS | REALIZED/PARTIALLY REALIZED INVESTMENTS (5) | ||||||||||||
As of December 31, 2024 | As of December 31, 2024 | |||||||||||||
Fund (Fee Initiation Date/Stepdown Date) (19) | Committed Capital (20) | Cumulative Invested Capital (1) | Percent Invested | Realized Value (2) | Remaining Fair Value (3) | MOIC (4) | Gross IRR (6)(12) | Net IRR (7)(12) | Net Accrued Carry/ (Giveback) (8) | Total Fair Value (9) | MOIC (4) | Gross IRR (6)(12) | ||
Corporate Private Equity | ||||||||||||||
CP VIII (Oct 2021 / Oct 2027) | $14,797 | $9,590 | 65% | $761 | $11,960 | 1.3x | 22% | 10% | $112 | n/a | n/a | n/a | ||
CP VII (May 2018 / Oct 2021) | $18,510 | $17,740 | 96% | $5,344 | $22,682 | 1.6x | 12% | 8% | $524 | $6,419 | 1.5x | 12% | ||
CP VI (May 2013 / May 2018) | $13,000 | $13,140 | 101% | $25,270 | $3,212 | 2.2x | 18% | 13% | $131 | $26,224 | 2.5x | 22% | ||
CP V (Jun 2007 / May 2013) | $13,720 | $13,238 | 96% | $28,109 | $565 | 2.2x | 18% | 14% | $40 | $28,134 | 2.3x | 20% | ||
CEP V (Oct 2018 / Oct 2024) | €6,416 | €5,565 | 87% | €1,446 | €5,212 | 1.2x | 5% | —% | $— | €— | 0.0x | Neg | ||
CEP IV (Sep 2014 / Oct 2018) | €3,670 | €3,797 | 103% | €6,197 | €1,268 | 2.0x | 17% | 12% | $73 | €6,249 | 2.1x | 20% | ||
CEP III (Jul 2007 / Dec 2013) | €5,295 | €5,177 | 98% | €11,725 | €24 | 2.3x | 19% | 14% | $2 | €11,658 | 2.3x | 19% | ||
CAP VI (Jun 2024/Jun 2030) | $2,266 | $— | —% | $— | $— | n/a | n/a | n/a | $— | n/a | n/a | n/a | ||
CAP V (Jun 2018 / Jun 2024) | $6,554 | $6,291 | 96% | $2,369 | $6,591 | 1.4x | 15% | 8% | $96 | $1,488 | 1.3x | 24% | ||
CAP IV (Jul 2013 / Jun 2018) | $3,880 | $4,146 | 107% | $8,360 | $561 | 2.2x | 18% | 13% | $37 | $8,664 | 2.4x | 21% | ||
CJP V (Nov 2024 / Nov 2030) | ¥434,325 | ¥— | —% | ¥— | ¥— | n/a | n/a | n/a | $— | n/a | n/a | n/a | ||
CJP IV (Oct 2020 / Nov 2024) | ¥258,000 | ¥224,357 | 87% | ¥108,478 | ¥276,215 | 1.7x | 38% | 24% | $58 | ¥153,712 | 3.9x | 69% | ||
CJP III (Sep 2013 / Aug 2020) | ¥119,505 | ¥91,192 | 76% | ¥257,202 | ¥16,742 | 3.0x | 25% | 18% | $6 | ¥247,857 | 3.4x | 27% | ||
CGFSP III (Dec 2017 / Dec 2023) | $1,005 | $972 | 97% | $527 | $1,684 | 2.3x | 25% | 18% | $75 | $1,064 | 4.3x | 37% | ||
CGFSP II (Jun 2013 / Dec 2017) | $1,000 | $943 | 94% | $1,960 | $608 | 2.7x | 26% | 20% | $35 | $1,956 | 2.4x | 28% | ||
CP Growth (Oct 2021 / Oct 2027) | $1,283 | $472 | 37% | $— | $551 | 1.2x | NM | NM | $— | n/a | n/a | n/a | ||
CEOF II (Nov 2015 / Mar 2020) | $2,400 | $2,364 | 98% | $4,091 | $1,314 | 2.3x | 21% | 15% | $63 | $4,589 | 2.4x | 23% | ||
CETP V (Mar 2022 / Jun 2028) | €3,180 | €1,209 | 38% | €— | €1,345 | 1.1x | NM | NM | $— | n/a | n/a | n/a | ||
CETP IV (Jul 2019 / Jun 2022) | €1,350 | €1,199 | 89% | €1,009 | €1,777 | 2.3x | 33% | 24% | $72 | €1,009 | 4.9x | 82% | ||
CETP III (Jul 2014 / Jul 2019) | €657 | €608 | 93% | €1,750 | €330 | 3.4x | 41% | 29% | $17 | €1,755 | 3.8x | 45% | ||
CGP II (Dec 2020 / Jan 2025) | $1,840 | $984 | 53% | $46 | $1,463 | 1.5x | 17% | 12% | $19 | n/a | n/a | n/a | ||
CGP (Jan 2015 / Mar 2021) | $3,588 | $3,206 | 89% | $1,575 | $3,050 | 1.4x | 6% | 5% | $43 | $1,728 | 2.2x | 16% | ||
All Other Active Funds & Vehicles (10) | $19,182 | n/a | $14,284 | $16,535 | 1.6x | 13% | 11% | $40 | $14,590 | 2.0x | 19% | |||
Fully Realized Funds & Vehicles (11)(21) | $34,791 | n/a | $80,118 | $2 | 2.3x | 28% | 20% | $2 | $80,120 | 2.3x | 28% | |||
TOTAL CORPORATE PRIVATE EQUITY (13) | $147,230 | n/a | $198,035 | $82,940 | 1.9x | 25% | 17% | $1,442 | $198,918 | 2.3x | 26% | |||
Real Estate | ||||||||||||||
CRP IX (Oct 2021 / Dec 2024) | $7,987 | $5,329 | 67% | $189 | $5,938 | 1.1x | NM | NM | $— | $182 | 1.4x | NM | ||
CRP VIII (Aug 2017 / Oct 2021) | $5,505 | $5,160 | 94% | $5,254 | $3,793 | 1.8x | 35% | 20% | $102 | $5,352 | 2.1x | 52% | ||
CRP VII (Jun 2014 / Dec 2017) | $4,162 | $3,826 | 92% | $5,077 | $1,241 | 1.7x | 17% | 10% | $22 | $5,040 | 1.8x | 22% | ||
CRP VI (Mar 2011 / Jun 2014) | $2,340 | $2,158 | 92% | $3,807 | $118 | 1.8x | 27% | 17% | $3 | $3,727 | 1.9x | 29% | ||
CPI (May 2016 / n/a) | $7,557 | $8,283 | 110% | $3,088 | $7,549 | 1.3x | 12% | 10% | n/a* | $2,049 | 1.8x | 13% | ||
All Other Active Funds & Vehicles (14) | $2,766 | n/a | $682 | $2,957 | 1.3x | 8% | 7% | $4 | $261 | 1.6x | 23% | |||
Fully Realized Funds & Vehicles (15)(21) | $13,244 | n/a | $19,941 | $12 | 1.5x | 10% | 6% | $— | $19,952 | 1.5x | 10% | |||
TOTAL REAL ESTATE (13) | $40,766 | n/a | $38,037 | $21,607 | 1.5x | 12% | 8% | $131 | $36,562 | 1.7x | 13% | |||
Infrastructure & Natural Resources | ||||||||||||||
CIEP II (Apr 2019 / Apr 2025) | $2,286 | $1,008 | 44% | $799 | $1,001 | 1.8x | 28% | 13% | $33 | $734 | 3.1x | NM** | ||
CIEP I (Sep 2013 / Jun 2019) | $2,500 | $2,464 | 99% | $3,047 | $1,608 | 1.9x | 15% | 9% | $58 | $3,602 | 2.3x | 19% | ||
CPP II (Sep 2014 / Apr 2021) | $1,527 | $1,606 | 105% | $1,544 | $1,381 | 1.8x | 14% | 9% | $75 | $2,485 | 2.5x | 21% | ||
CGIOF (Dec 2018 / Sep 2023) | $2,201 | $1,937 | 88% | $459 | $2,729 | 1.6x | 20% | 11% | $67 | $341 | 1.9x | 22% | ||
CRSEF II (Nov 2022 / Aug 2027) | $1,187 | $389 | 33% | $— | $555 | 1.4x | NM | NM | $6 | n/a | n/a | n/a | ||
NGP XIII (Feb 2023 / Feb 2028) | $2,300 | $322 | 14% | $— | $413 | 1.3x | NM | NM | $1 | n/a | n/a | n/a | ||
NGP XII (Jul 2017 / Jul 2022) | $4,304 | $3,324 | 77% | $4,150 | $2,761 | 2.1x | 22% | 15% | $42 | $3,551 | 3.4x | 40% | ||
NGP XI (Oct 2014 / Jul 2017) | $5,325 | $5,034 | 95% | $6,877 | $2,775 | 1.9x | 13% | 10% | $135 | $7,297 | 2.1x | 21% | ||
NGP X (Jan 2012 / Dec 2014) | $3,586 | $3,351 | 93% | $3,428 | $290 | 1.1x | 3% | —% | $— | $3,262 | 1.2x | 5% | ||
All Other Active Funds & Vehicles (17) | $5,101 | n/a | $4,003 | $3,928 | 1.6x | 14% | n/a | $16 | $3,740 | 2.0x | 17% | |||
Fully Realized Funds & Vehicles (18)(21) | $1,190 | n/a | $1,435 | $— | 1.2x | 3% | 1% | $— | $1,435 | 1.2x | 3% | |||
TOTAL INFRASTRUCTURE & NATURAL RESOURCES (13) | $25,726 | n/a | $25,743 | $17,439 | 1.7x | 12% | 8% | $432 | $26,448 | 2.0x | 15% | |||
Legacy Energy Funds (16) | $16,741 | n/a | $24,035 | $6 | 1.4x | 12% | 6% | $— | $24,041 | 1.4x | 14% | |||
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*Net accrued fee related performance revenues for CPI are excluded from Net Accrued Performance Revenues. These amounts will be
reflected as fee related performance revenues when realized, and included in Fund level fee revenues in our segment results. There were no
accrued fee related performance revenues for CPI as of December 31, 2024.
**The IRR is incalculable, which occurs in instances when a distribution occurs prior to a Limited Partner capital contribution due to the
use of fund-level credit facilities.
(1)Represents the original cost of investments since inception of the fund.
(2)Represents all realized proceeds since inception of the fund.
(3)Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining
escrow values for realized investments.
(4)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried
interest, divided by cumulative invested capital.
(5)An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in,
the investment. An investment is considered partially realized when the total amount of proceeds received in respect of
such investment, including dividends, interest or other distributions and/or return of capital, represents at least 85% of
invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves
pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR,
when considered together with the other investment performance metrics presented, provides investors with meaningful
information regarding our investment performance by removing the impact of investments where significant realization
activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of
investment performance and should not be considered in isolation. Such limitations include the fact that these measures
do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The
exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in
instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross
IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other
companies that use similarly titled measures.
(6)Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested
capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of
management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the
impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based
on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment
cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow
dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in
each fund.
(7)Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested
capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all
management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on
the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash
flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may
differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues
with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for
multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted
return for a Limited Partner who invested sequentially in each fund.
(8)Represents the net accrued performance revenue balance/(giveback obligation) as of the current quarter end.
(9)