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, warehouse investments on our balance sheet for new funds, 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.
• 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.
Risks Related to Regulation and Litigation
• Rapidly developing and changing global data security and privacy laws and regulations could increase compliance costs
and subject us to enforcement risks and reputational damage.
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• 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.
• 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.
• Our failure to deal appropriately with conflicts of interest in our investment business could damage our reputation and
adversely affect our businesses.
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 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 business depends in large part on our ability to raise capital from third-party investors. A failure to raise capital from
third-party investors on attractive fee terms, or at all, would impact our ability to collect management fees or deploy such
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
individual 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 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 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.
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• 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 stock eligible for future sale.
• Certain of our co-founders have the right to designate members of our Board of Directors.
• Anti-takeover provisions in our organizational documents could delay or prevent a change in control.
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.
The Carlyle Group Inc. was formed in Delaware as a partnership on July 18, 2011. 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, growth, real estate, and infrastructure & 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
• Carlyle AlpInvest (formerly, Global Investment Solutions): Funds and vehicles advised by AlpInvest Partners
B.V. and its affiliates (“AlpInvest”), which include global private equity programs that pursue secondary
purchases and financing of existing portfolios, managed co-investment programs, and primary fund investments.
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.
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.”
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“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 and evergreen products;
(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) of certain cross-platform credit and direct lending products,
excluding cash and cash equivalents for one of our business development companies; 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.
“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 and evergreen products;
(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.
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.
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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 Carlyle AlpInvest Private Markets Secondaries (“CAPS”) 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 Carlyle
AlpInvest business segment prior to its sale on April 1, 2021.
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PART I.
ITEM 1. BUSINESS
Overview
Carlyle is one of the world’s largest global investment firms that deploys private capital across three business
segments: Global Private Equity, Global Credit, and Carlyle AlpInvest (formerly, 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 $477 billion in AUM as of December 31, 2025 . Our experienced and diverse team of more than 2,500 employees
includes 770 investment professionals in 27 offices across four continents, and we serve more than 3,200 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 2025 include:
• Assets under management grew 8% to $477 billion as of December 31, 2025 from $441 billion as of
December 31, 2024 . The increase was driven by inflows of $53.7 billion during 2025, a 32% increase from
2024. We deployed $54.5 billion across our platform during 2025 and realized proceeds of $34.1 billion for
our carry fund investors.
• We returned approximately $0.9 billion in capital to our shareholders . During 2025 , we paid dividends to our
common shareholders of $505 million , and used $400 million to repurchase 7.5 million shares of our common
stock.
• In our Global Private Equity (“GPE”) segment, we realized proceeds of $18.2 billion for our carry fund
investors in 2025 and deployed $10.4 billion across the segment, both representing increases from prior year
levels. Inflows of $7.5 billion during the year reflected final closes in our tenth and largest U.S. real estate
fund (“CRP X”) and our sixth Asia buyout fund (“CAP VI”), fundraising in our life sciences platform, and
subscriptions in our evergreen real estate offering (“CPI”). We had continued success in initial public
offerings in 2025, listing Orion Breweries in Japan, Hexaware in India, and Medline in the United States,
reflecting breadth and diversity across geographies and sectors.
• Our Global Credit (“GC”) AUM increased 10% year-over-year to $211 billion, driven by inflows of $28.3
billion across a diverse set of strategies. D eployment of $29.9 billion in 2025 more than doubled compared to
2023 levels, driven by strong direct lending originations and sustained activity in our structured credit
products. We priced 39 CLOs in 2025, including the closing of nine new CLO issuances . Our Global Capital
Markets strategy also had a record year, and was t he primary driver of $206.0 million of portfolio advisory
and transaction fees for the year ended December 31, 2025 .
• In our Carlyle AlpInvest segment, total AUM increased 20% year-over-year to $102 billion , driven by $ 17.9
billion of inflows primarily from fundraising in our secondaries & portfolio finance, CAPM, and our newly
launched CAPS funds. We deployed $14.2 billion in investments across our Carlyle AlpInvest platform, and
we realized proceeds of $10.3 billion for our Carlyle AlpInvest investors.
Business Segments
We operate our business across three segments: Global Private Equity, Global Credit, and Carlyle AlpInvest .
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.”
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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, 2025 , we had investments in more than 275 active portfolio companies that employ over 700,000
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 2025 , we invested $5.9 billion
in new and follow-on investments through our corporate private equity funds and realized $11.3 billion of proceeds. As of
December 31, 2025 , our corporate private equity funds had, in the aggregate, $ 104.3 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 1,700
investments across the world from inception through December 31, 2025 . In 2025 , we invested $2.2 billion in new and follow-
on investments through our real estate funds and realized $1.6 billion of proceeds. As of December 31, 2025 , our real estate
funds managed, in the aggregate, $ 36.0 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 primarily focuses on investments across the energy
value chain outside of North America. We generally conduct our North American energy investing through our strategic
investment in NGP, a Texas-based energy investor. In 2025, we invested $2.3 billion in new and follow-on investments through
our infrastructure and natural resources funds and realized $5.2 billion of proceeds . As of December 31, 2025 , we managed
$23.3 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, 2025 (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
(1) Total AUM includes NGP, which advises ten funds with $10.8 billion in AUM as of December 31, 2025 . 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 our strategic
investments in NGP. 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 $211.3 billion in assets under management as of December 31, 2025 , advises
products that pursue investment strategies across the credit spectrum, including liquid credit, opportunistic credit, direct
lending, asset-backed finance, aviation finance, infrastructure credit, and cross-platform credit products . 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
205 investment professionals and leverages the resources and industry expertise of Carlyle’s global network to provide creative
solutions for borrowers .
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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 agreements
with certain subsidiaries and affiliates of Fortitude and FCA Re . As of December 31, 2025 , AUM related to
capital raised for equity investments in reinsurance companies, including from third-party investors to acquire a
controlling interest in Fortitude, was $6.5 billion . As of December 31, 2025 , total AUM related to these strategic
advisory services agreements was $80.4 billion , which has increased over 50% since signing the Fortitude
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 $24.6 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 2025 , we closed nine new CLOs with an aggregate size of $4.8 billion . As of
December 31, 2025 , our liquid credit team advised funds with AUM totaling $50.1 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, 2025 , our opportunistic credit team advised products totaling $20.3 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,
2025 , our direct lending investment team advised investment vehicles with AUM totaling $13.6 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, 2025 , ABF represented $10.2 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, 2025 , Carlyle Aviation Partners had approximately $12.8 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, 2025 , our Infrastructure credit team
managed $6.9 billion in AUM.
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• Cross-Platform Credit Products . Our platform initiatives include CTAC, our U.S. closed-end interval fund, and
ETAC, our semi-liquid European fund, that invest 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, 2025 , the Global Credit platform initiatives
represented $10.0 billion in AUM.
Global Capital Markets
• Carlyle Global Capital Markets . Carlyle Global Capital Markets (“GCM”) is a loan syndication and capital
markets business that arranges, places, underwrites, originates and syndicates loans and underwrites and places
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, 2025 (dollar amounts in
billions).
AUM
% of Total
AUM
Fee-earning
AUM
Available
Capital
Active
Funds
Investment
Professionals
Carlyle AlpInvest
Our Carlyle AlpInvest (formerly, 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 and CAPS funds , which have $7.2 billion i n AUM as of December 31,
2025 . Carlyle AlpInvest executes these activities through AlpInvest, one of the world’s largest investors in private equity.
The primary areas of focus for our Carlyle AlpInvest teams include:
• Private Equity Secondary & Portfolio Finance Investments. Funds managed by AlpInvest build an investment
portfolio of private equity owned assets through the acquisition of limited partnership interests of private funds in
the secondary market and other types of transactions such as fund recapitalizations, portfolio restructurings and
spin-outs, and portfolio financings. Such funds will also invest in various debt (including both investment grade
and non-investment grade debt), preferred equity and structured equity securities issued by private funds or other
vehicles that own or have similar interests in private equity owned assets. 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 & 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, 2025 , our secondary & portfolio finance investments program totaled $45.7 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, 2025 , our co-investment programs totaled $24.1 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, 2025 , AlpInvest advised $25.0 billion in AUM in private equity fund investments.
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The following table presents certain data about our Carlyle AlpInvest segment as of December 31, 2025 (dollar
amounts in billions).
AUM
% of Total
AUM
Fee-earning
AUM
Fund
Vehicles
Available
Capital
Investment
Professionals
Amount Invested
Since Inception
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, 2025 , 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 a rtificial
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, 2025 , 75 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.
Carlyle AlpInvest
Our Carlyle AlpInvest team aims to apply a wide array of capabilities to help clients meet their investment objectives.
The investment approach of our Carlyle AlpInvest 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 $477 billion as of December 31, 2025 for each of our three global business segments (in billions):
Global Private Equity
Global Credit
Corporate Private Equity
Insurance Solutions 4
U.S. Buyout (CP)
Liquid Credit
Asia Buyout (CAP)
U.S. CLOs
Europe Buyout (CEP)
Europe CLOs
Carlyle Global Partners (CGP)
CLO Investment Products
Japan Buyout (CJP)
Revolving Credit
Europe Technology (CETP)
Private Credit
U.S. Growth (CP Growth / CEOF)
Opportunistic Credit (CCOF / CSP)
Life Sciences (ABV / ACCD)
Direct Lending 5
Asia Growth (CAP Growth / CAGP)
Aviation Finance (SASOF / CALF)
Other 1
Asset-Backed Finance
Real Estate
Cross-Platform Credit (incl CTAC)
U.S. Real Estate (CRP)
Infrastructure (CICF)
Core Plus Real Estate (CPI)
Other 6
International Real Estate (CER)
Infrastructure & Natural Resources
Carlyle AlpInvest
NGP Energy 2
Secondaries & Portfolio Finance (ASF / ASPF)
Infrastructure and Renewable Energy 3
Co-Investments (ACF)
International Energy (CIEP)
Primary Investments & Other 7
Note: All amounts shown represent total assets under management as of December 31, 2025 , 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.
(1) Includes our Financial Services (CGFSP), Sub-Saharan Africa Buyout (CSSAF), South America Buyout (CSABF), Peru Buyout (CPF),
MENA Buyout and Ireland Buyout (CCIF) funds , as well as platform accounts which invest across Corporate Private Equity strategies.
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(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 (CGBD / CARS) and our evergreen fund (CDLF).
(6) Includes our Energy Credit (CEMOF) and Real Estate Credit (CNLI) funds.
(7) Includes Carlyle AlpInvest Private Markets (CAPM) and Carlyle AlpInvest Private Markets Secondaries (CAPS) 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.
Investor Relations
Our diverse and sophisticated investor base includes more than 3,200 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 strategy and coordination abilities 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. The investor relations team is also supported by a central strategy and operations team
responsible for data analytics and additional fulfillment responsibilities. Our Global Wealth team is dedicated to fundraising in
the private wealth channel globally and, in the United States, is organized regionally within each of its three constituent
segments: Registered Investment Advisors, Wirehouses, and Independent Broker Dealers. Global Wealth also includes
dedicated strategic partnerships, marketing, product development, and support professionals who help drive fundraising efforts.
T he firm manages $18 billion in assets under management and serves over 45,000 investors across Global Wealth products as
of December 31, 2025 .
Our investor relations professionals are in regular dialogue with our fund investors, enabling us to monitor investor
preferences and tailor future solutions to meet investor demand. We seek to secure a first-mover advantage with key investors
by 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 market 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 generating inflows of $158 billion over the past three years, including
nearly $54 billion in 2025.
As of December 31, 2025 , approximately 93% of commitments (by doll ar 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 1,000 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
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.
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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 domiciled outside the European Economic Area (the “EEA”) engages an investment adviser that
is registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our EEA-domiciled investment
funds engage a Carlyle entity that is domiciled in the EEA as an external alternative investment fund manager (an “AIFM”),
and the AIFM generally delegates portfolio management responsibilities for the fund to a Carlyle entity that is registered under
the Advisers Act. Our investment advisers and AIFMs generally are entitled to a management fee from each investment fund or
account they are engaged by. For a discussion of the management fees to which our investment advisers and AIFMs 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 Carlyle 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 investment 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.
With respect to our closed-end carry funds, investors generally agree to fund their commitment over a period of time.
For such carry funds, the investment period generally runs until the earliest of (i) the expiration of a defined period of time;
(ii) the date the general partner cancels the investors’ obligation to fund capital contributions; (iii) the date a supermajority in
interest (based on capital commitments) of investors vote to terminate the investment period; or (iv) the occurrence of a Key
Person Event, unless upon any of these events the investors vote to continue the investment period. Following the termination
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of the investment 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 investment period, and make
follow-on investments in existing investments. Generally, an investor’s obligation to fund follow-on investments continues
following the end of the investment period, although certain funds have a limit on when and how much the fund is permitted to
fund for such follow-on investments.
Each closed-end carry fund generally has a 10-year term from its initial or final closing date, although some funds
have shorter (such as certain Carlyle Aviation Partners funds and Global Credit funds) or longer terms. A fund’s governing
agreement generally provides that the fund’s term may be extended by the general partner, in certain cases with consent of the
limited partners or the investor advisory committee.
Incentive Arrangements / Fee Structure
Fund Management Fees. We provide management services to funds that engage our investment advisers or AIFMs.
For closed-end carry funds, management fees are based on limited partners’ capital commitments, invested capital, or invested
and committed capital during the fund’s investment period. Following the expiration or termination of the investment period,
the management fee rate may be reduced and the basis for management fees may change to be net invested capital, the lower of
cost or net asset value of invested capital, or the net asset value of unrealized investments. The investment adviser or AIFM will
receive management fees during the term of the fund. 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.
Management fees for our open-end funds and BDCs and other 1940 Act regulated vehicles are generally based on the
fund’s net asset value or gross assets, payable on a monthly or quarterly basis in arrears over the life of the fund. Investor
redemptions from an open-end fund or a decline in a fund’s net asset value will reduce the management fees payable by the
fund. For our CLOs and other structured products, management fees are based on the total par amount of assets or the aggregate
principal amount of notes in the CLO and are due 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.
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 management fees charged to investors in our carry funds generally are offset by 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. M anagement 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. To the extent the financing instruments are held by the funds, these
fees are generally offset against management fees of the funds.
We also receive management fees in certain situations where we do not act as the investment adviser to a fund. Under
the strategic advisory services agreements with Fortitude and Fortitude Carlyle Asia Re, Ltd. (“FCA Re”), the Company earns a
recurring management fee due quarterly in arrears based on the client’s general account assets, which, with respect to Fortitude,
adjusts within an agreed range based on Fortitude’s overall profitability. Our equity interest in NGP entitles us to an allocation
of management fee related revenues of the NGP entities that serve as advisors to the NGP Energy Funds. 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 our strategic investments in NGP.
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 is generally calculated on a “realized gain” basis, and each general partner is
generally entitled to a carried interest 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. We also
allocate a portion of carried interest to our annual discretionary bonus pool for our employees. In total, w e currently allocate a
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range of approximately 60% to 70% of any carried interest that we earn to those individuals and our carried interest pool
program.
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 Global 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 Carlyle AlpInvest 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, Carlyle Credit Income Fund (“CCIF”), CAPM, CAPS,
Carlyle Private Equity Partners Fund (“ CPEP”) , 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.
Capital Invested in and Alongside Our Investment Funds
To further align our interests with those of investors in our investment funds, generally up to 3% 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
Carlyle AlpInvest 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
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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, 2025 , we employed more than 2,500 individuals, including 770 investment professionals, located in 27
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 challenging the status
quo and leveraging 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.
Our People
At Carlyle, our success hinges on leveraging opportunities 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 2025 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.
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, pursuant to our bonus deferral
program, a portion of the performance-based bonuses for 2025 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. In
addition, during 2025, 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.
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The success of our business is fundamentally connected to the well-being of our people. We are committed to our
employees’ health, safety, and wellness and seek to provide benefits that are locally relevant to our 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 others. 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 2025 , more than 280 Carlyle employees gave over 500 philanthropic gifts, which
we matched. These gifts supported over 250 nonprofit organizations globally. Carlyle employees also put their time and
expertise to work through volunteer activities across our offices .
Sustainability
As a 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 sustainability 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 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.
Our Board of Directors has ultimate oversight of our firm’s approach to sustainability. The Board receives periodic
updates on our sustainability strategy and certain investment implications, and receives information on thematic topics, such as
our approach to climate risk and opportunity. T he 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 (“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
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management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term
timeframe. Our Information Security Committee (“ISC”), 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 private wealth 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 Carlyle AlpInvest segment, our main 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 Carlyle AlpInvest 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.
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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 Carlyle AlpInvest 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 and the SEC.
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
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”), a sub sidiary of Carlyle, serves as the investment
adviser 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 and CAPS, each of which is regulated as a registered investment company under the Investment Company Act. CGCIM
also serves as a sub-adviser to CAPM and CAPS.
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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
assimilated 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 is only
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 is only permitted to carry out these activities in relation to eligible
counterparties and professional clients.
In April 2024, the AlpInvest Partners LLP (“AlpInvest UK”) application for authorization was approved by the FCA.
AlpInvest UK now is authorized and regulated by the FCA with permission to carry on investment a dvisory and related
activities, including advising on and arranging deals in relation to certain types of investments in relation to eligible
counterparties and professional clients.
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.
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 is only permitted to carry
out these activities in relation to eligible counterparties and professional clients.
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, an assimilated 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). Currently, Carlyle has three authorized AIFMs in the EEA: AlpInvest Partners B.V.
(“AlpInvest BV”), 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’s assimilated version of AIFMD.
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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 BV obtained authorization as an AIFM from the Authority for Financial Markets in the Netherlands (the
“AFM”) in 2015. AlpInvest BV 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 2014.
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
AIFMD. The UK also operates a national private placement regime under AIFMD, as assimilated into UK law 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 from April 16, 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-end 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(s) of the AIFM
and any relevant AIF(s) have not 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. Although the changes in AIFMD II will not be directly replicated in UK legislation, the FCA and HM Treasury are
progressing with their own reforms to the UK’s domestic version of AIFMD in 2026, the full impacts of which to Carlyle’s
business are not yet known.
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 imposed restrictions and obligations on fund managers
that are pre-marketing their funds in the European Union. Moreover, some EU member states (but not all) also 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 and /or pre-marketing funds. Accordingly, our ability to distribute our funds in the European Union will vary from
country to country notwithstanding this pan-EU regulation.
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AIFMD and the Cross-Border Marketing Rules are subject to further potential change, following a broad package of
draft proposals, published by the European Commission on December 4, 2025, known collectively as the “Market Integration
Package” (the “MIP”). The MIP proposals are aimed at harmonizing key obligations that affect market participants operating in
the EU, including marketing and pre-marketing, cross border management of AIFs, delegation and operating requirements, and
investor disclosures and reporting. These proposals are expected to come into effect, at the earliest, in the second half of 2027
and could impact the operating requirements of EU AIFMs, including CIM Europe and AlpInvest BV, with respect to potential
rules of conduct and prudential rules.
As outlined above, certain of our European subsidiaries, notably CECP, CELF, CIC, and AlpInvest UK, must comply
with the regulatory framework established by MiFID (as assimilated into UK law), which regulates the provision and conduct
of investment services and activities throughout the EEA. Certain aspects of MiFID also apply to AlpInvest BV and CIM
Europe by virtue of their MiFID “top-up” permissions as part of their AIFMD authorizations and to CIM Advisors France SAS
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 requires 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 assimilated into UK law
(subject to certain amendments to ensure it operates properly in a UK-specific context) in connection with this withdrawal. T he
EU has continued to introduce amendments to MiFID II. For example, in August 2022, EU MiFID firms 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 and SFDR.
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 UK.
Under the IFPR, among other requirements, CECP, CELF, and AlpInvest UK 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 UK 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. The
FCA is reviewing further changes to prudential requirements and remuneration, which are likely to be relevant to UK
investment firms under MiFID II, including CECP, CELF, and AlpInvest UK.
In the EU, IFR/IFD took effect from June 26, 2021, and represented a complete overhaul of “prudential” regulation in
the EU and substantially increased regulatory capital requirements for certain investment firms and imposed 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 BV, one of our subsidiaries, because it is an AIFM
in the Netherlands with top-up permissions to provide investment services. In particular, as AlpInvest BV’s AUM attributable
to separate accounts regulated by MiFID II increases so will AlpInvest BV’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.
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The UK introduced an important and substantial regime, the “Consumer Duty,” designed to improve outcomes for
individual investors, which fully began to apply in July 2024 for both funds that were still open to investment and those that had
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.
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.
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Carlyle MENA Advisors Limited, a company limited by shares in the Abu Dhabi Global Market, is authorized by the
Abu Dhabi Financial Ser vices 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
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
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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.x.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 herei n .
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 (including the realignment of alliances), social unrest, supply chain pressures,
and the effects of climate change. Over the last several years, markets have been affected by the introduction of new tariffs,
monetary policy uncertainty, inflationary pressures, sharp currency moves, heightened geopolitical tensions, the imposition of
export controls and trade barriers, the imposition of economic and political sanctions (upon specific individuals or companies
and country, industry, and sector-wide restrictions), 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 Asian 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, 2025, the S&P 500 rose by 16.4% , while the MSCI All Country
World Index (MSCI ACWI) increased by 20.6% . This robust full-year performance masks interim volatility and fragile
underlying public equity market dynamics. After the April 2nd “Liberation Day” tariff announcements in the United States, the
S&P 500 fell by over 12% peak-to-trough in the six days that followed. The market rebounded strongly in the weeks that
followed and regained its prior peak by mid-summer. In the process of this rebound, both the S&P 500 and global indices have
become ever more concentrated in a handful of AI-related or AI-adjacent stocks. The top ten largest stocks now account for
over 40% of the market capitalization of the S&P 500, and eight of those ten companies are exposed to roughly the same AI
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risks. A change in the outlook for AI-related company earnings, or a reassessment of these companies’ valuations, could drive
significant market movements. Overall, factors that impact global markets, including growth expectations, 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 that they have received from existing funds when
considering commitments to new funds. Although net distributions to investors across all private asset classes turned positive in
the second quarter of 2025 for the first time in eighteen quarters , cumulative contributions have exceeded distributions by
nearly $550 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.
Global merger and acquisition (“M&A”) volume totaled $5.1 trillion in 2025, a 44% increase from 2024. While total
M&A activity has accelerated, 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. In
particular, while deal activity has been robust over the past year, the exit environment in private markets remains sluggish. A
deceleration in M&A activity could further 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 our investments 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. However,
in 2025 , we deployed nearly $55 billion across our business, a 28% increase over 2024 .
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 current 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, Eastern Europe, and Latin America 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 current 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. In addition, the current administration has sought to reduce
subsidies, block permits and leases for new projects, and roll back favorable terms for investments in renewable energy
ventures, 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, the expansion of the jurisdiction of the
Committee on Foreign Investment in the United States (“CFIUS”) in 2018 and then again in 2022 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
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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 Global Capital Markets in connection with activities related to the
underwriting, issuance, and placement of debt and equity securities.
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 revolving credit facility 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.
Moreover, 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.
Severe public health events also may occur from time to time, and could directly and indirectly impact us in material
respects that we are unable to predict or control, including by threatening our employees’ well-being and morale and
interrupting business activities. Moreover, related factors may materially and adversely affect us, including the effectiveness of
governmental responses, the extension, amendment, or withdrawal of any government programs or initiatives and the timing
and speed of economic recovery. Actions taken in response may contribute to significant volatility in financial markets,
resulting in increased volatility in equity prices, material interest rate changes, supply chain disruptions, such as simultaneous
supply and demand shock in global, regional, and national economies, and an increase in inflationary pressures.
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 senior notes or any other indebtedness mature, we may be required to refinance them by 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 September 2025, we
issued senior unsecured bonds with aggregate principal of $800.0 million due September 2035. We also have other senior notes
and junior subordinated notes with an aggregate principal amount of $1,875.0 million as of December 31, 2025 , as well as a
credit agreement that provides a $1.0 billion revolving facility with a final maturity date of May 29, 2030 (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 the fourth quarter of 2025.
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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. This also contributes to the volatility of our cash
flow. 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 any profits can be realized, particularly if market conditions are
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. 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, warehouse investments on our balance sheet for new funds, 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 have made, and expect to continue making, balance sheet investments to seed certain funds during their early
fundraising stages, and we may later sell those investments to the funds at the lower of our original cost or fair value , without
interest, regardless of how long we held them. If we do not sell a warehoused investment to a fund, we may sell it to another
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buyer at a price below our cost or hold it longer than intended, exposing us to value fluctuations and changing business
conditions. We also may voluntarily reduce management fee or incentive 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.”
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, including our Co-Presidents, 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 also face potential threats to our physical security, including to our offices and the safety
and well-being of our people, including our senior Carlyle professionals. These threats could involve terrorism, insider threats,
targeted threats against our senior Carlyle professionals, workplace violence, or civil unrest, all of which could adversely affect
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
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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, particularly in light of increasingly unpredictable enforcement of immigration laws and visa
requirements, and we may not be successful in our efforts to recruit, retain, and motivate these professionals. 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 and other long-term
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. In this respect, we continue to monitor developments on the state and federal level. 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.
We have granted and e xpect to grant equity awards in respect of our shares of common stock. This includes awards
from our Equity Incentive Plan 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, 2025 , we have
granted a total of approximately 7.4 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 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%, 140%, and 160% of the applicable starting share price,
each of which targets has been satisfied as of December 31, 2025 . In 2025, we granted a total of 8.1 million restricted stock
units to Carlyle professionals, and in February 2026, we granted a total of 5.8 million restricted stock units to Carlyle
professionals. Following the foregoing grants, taken together with other restricted stock unit grants since a new share reserve
was approved for the Equity Incentive Plan in June 2021 , there were 17.6 million remaining shares of common stock available
for grant under the Equity Incentive Plan as of February 27, 2026 .
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As of December 31, 2025 , our employees held an aggregate of 25.6 million unvested restricted stock units, which vest
over various time periods (generally from one year to four years from the date of grant) and 14.2 million of which also have
vesting conditions tied to the achievement of absolute stock price targets over a period of three to four years. 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
additional risk. See “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 individual
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 have also 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 will also 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.
In addition, 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. We also expect opportunities may 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
funds’ 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;
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• 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.
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
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. Moreover, 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.
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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 Carlyle AlpInvest 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
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 face increased difficulty in obtaining or maintaining sufficient insurance
(including cyber insurance) against potential liabilities and that could have a material adverse effect on our business. We face a
risk of loss from a variety of types of claims, including related to securities, antitrust, contracts, cyber incidents, fraud, business
interruption, and various other potential claims. Insurance and other safeguards will often 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 are responsible for any
shortfall, including if the shortfall is a substantial amount. 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 or
cyber insurance. 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. There is increasing regulation of
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data transfers as a national security issue that could limit how we and our portfolio companies are able to utilize data and those
limits could have an adverse effect on our and our portfolio companies’ business results.
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 2025, Carlyle experienced no material
cyber incidents and 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, our employees, our investors, and the public 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, including but not limited to automation of operational tasks,
identification of investment opportunity, investment due diligence, and investment decision-making. 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, and 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 AI Technologies. We expect to be involved in the collection of such data only in the context of limited
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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. In this respect, reliance on AI-generated
data or analysis that contains “hallucinations” or errors could lead to flawed investment decisions or regulatory reporting
inaccuracies.
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.”
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. Data sources such as those we license and
those we obtain via our business operations may become unavailable and limit our ability to establish or maintain AI
Technologies, or data sources may seek to enjoin our use or receive a portion of related revenue, which would result in losses
and limit our growth. For example, we may use and market our use of AI Technologies in a manner that changes over time due
to model error rates, staffing issues, compute limitations, or other developments that make prior marketing of our use of AI
Technologies inaccurate, and given the speed of these changes, not inform investors of these changes before they go into effect.
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
Rapidly developing and changing global data security and privacy laws and regulations could increase compliance costs and
subject us to enforcement risks and reputational damage.
We and our funds’ portfolio companies are subject to various risks and costs associated with the collection, storage,
transmission, and other processing of personal data. This personal data is wide ranging and relates to our investors, employees,
contractors, and other counterparties and third parties. Any inability, or perceived inability, even if unfounded, by us to
adequately address privacy concerns, or comply with applicable privacy laws, regulations, policies, industry standards, or
related contractual obligations, even if unfounded, could result in regulatory and third-party liability, increased costs,
disruptions to business and operations, and reputational damage.
Data security and privacy compliance obligations to which we are subject impose compliance costs on us, which could
increase significantly as laws and regulations evolve globally. Our compliance obligations include those relating to U.S. laws
and regulations, including, among others, state regulations such as the California Privacy Rights Act (“CPRA”), which provides
for enhanced consumer protections for California residents, a private right of action for data breaches and statutory fines, and
damages for data breaches or other California Consumer Privacy Act (“CCPA”) violations, as well as a requirement of
“reasonable” cybersecurity. At the U.S. federal level, the SEC has adopted amendments to Regulation S-P that took effect in
December 2025. These amendments impose operationally challenging notification requirements and deadlines and obligations
to implement written policies and procedures to govern oversight of service providers that will likely increase associated
compliance costs.
Our compliance obligations also include those relating to foreign data collection and privacy laws, including, for
example, the GDPR and U.K. Data Protection Act, as well as laws in many other jurisdictions globally, including Switzerland,
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Japan, Hong Kong, Singapore, India, China, Australia, Canada, and Brazil. Global laws in this area are rapidly increasing in the
scale and depth of their requirements, and are also often extra-territorial in nature. In addition, a wide range of regulators and
private actors are seeking to enforce these laws across regions and borders. We also frequently have privacy compliance
requirements as a result of our contractual obligations with counterparties. These legal, regulatory, and contractual obligations
heighten our data protection and privacy obligations in the ordinary course of conducting our business in the United States and
internationally.
Any inability, or perceived inability, by us or our funds’ portfolio companies to adequately address data protection or
privacy concerns, or comply with applicable laws, regulations, policies, industry standards and guidance, contractual
obligations, or other legal obligations, even if unfounded, could result in significant legal, regulatory, and third-party liability,
increased costs, disruption of our and our funds’ portfolio companies’ business and operations, and a loss of client (including
investor) confidence and other reputational damage. Many regulators have indicated an intention to take more aggressive
enforcement actions regarding data privacy matters, and private litigation resulting from such matters is increasing and resulting
in progressively larger judgments and settlements. In particular, the SEC’s stated examination priorities include an intended
focus on adviser’s policies and procedures, internal controls, oversight of third-party vendors, and governance practices as it
pertains to the safeguarding of customer records. Moreover, as new data protection and privacy-related laws and regulations are
implemented, the time and resources needed for us and our funds’ portfolio companies to comply with such laws and
regulations continues to increase and become a significant compliance workstream.
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, 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, fiduciary standards of conduct, financial technologies, and compliance with the SEC’s
recently adopted rules, including those referenced herein.
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. For example, 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.
We also are regularly 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.
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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.
For example, the Dodd-Frank Act added section 13 to the BHC Act, commonly referred to as the “Volcker Rule,” which
restricts relationships and activities of banking organizations with certain private equity funds and hedge funds. Among other
things, the Volcker Rule (together with its implementing regulations) 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, investing in, or conducting certain activities with 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 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
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 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, a confidential form relating to reporting by
private funds and intended to be used for systemic risk oversight purposes, requires that our investment advisers report financial
and other information regarding the funds and their investments. Further changes to any required regulatory reporting with
respect to the funds or our investment advisers could increase the time, costs, and expenses associated therewith. The SEC has
also adopted new or amended rules, some of which remain subject to delays or challenges, 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
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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.
Increases in the regulations applicable to private investment funds generally or the funds and/or our investment
advisers in particular, only some of which are further described herein, may result in increased expenses, which are expected to
be material, associated with the fund’s activities and additional resources of our investment advisers being devoted to such
regulatory reporting and compliance-related obligations, which may have an adverse effect on us and our operations.
The SEC has also adopted, and has proposed, or may propose, 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 addition, the SEC has also delayed or postponed the
implementation of previously adopted rules, which creates some uncertainty as to when certain rules will go into effect or
whether such rules will be reproposed or revisited, including with modifications.
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 has
been delayed until at least June 2026 for larger fund complexes.
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. On July 21, 2025, FinCEN announced its intention to delay the implementation of the AML/CFT rule until
January 1, 2028, and to revisit the scope of both the AML/CFT rule and a related proposed rule establishing customer
identification program rule requirements for investment advisers. These types of AML/CFT rules, if and when they become
effective, may impose substantial regulatory obligations related to AML/CFT on our business and may result in increased
compliance costs and expenses borne by us, our investment advisers and our funds.
Any current or future proposed rulemakings or rule amendments by the SEC, if adopted, may result in material
alterations to how Carlyle operates its business, and there can be no assurance that such alterations will not have an adverse
effect on Carlyle, its investment advisers, and its funds. The incremental costs of compliance by us, our investment advisers, or
our funds with any new SEC rules may be significant. In particular, any new rules could have a significant effect on registered
investment advisers, including those to private funds, such as Carlyle and our investment advisers, and their operations,
including increasing compliance burdens and associated regulatory costs; increasing litigation risk; reducing the ability to
receive certain expense reimbursements in certain circumstances; increasing the risk of regulatory action, fines, penalties, or
public regulatory sanctions; increasing the cost and availability of reporting; and reducing the availability of service providers
and counterparties and/or increasing the costs associated with obtaining and maintaining relationships with service providers
and counterparties for us, our investment advisers and our funds. Such changes may also result in modifications to our practices
and risk appetite in respect of our investment programs and other operations, which for example, could negatively impact
decision-making and fund performance. In addition, increased disclosure obligations are likely to result in Carlyle, our
investment advisers, and our funds incurring higher costs if such new disclosure obligations require it to spend more time, hire
additional personnel, or buy new technology to comply effectively. Further, new rulemaking could also increase the cost of
insurance, specifically D&O and E&O insurance, or may even make such insurance coverage unavailable.
In addition, 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.
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
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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 the role of sustainability in asset managers and issuers’ investment
processes, in order to allow investors to scrutinize, 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. The SEC has previously brought enforcement actions based on ESG
marketing and disclosures not matching actual investment processes and controls, and there could continue to be enforcement
activity in this area 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 our 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.
Carlyle is subject to extensive regulation, including periodic examinations, by governmental agencies and self-
regulatory organizations in the jurisdictions in which it operates 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, are also empowered to conduct
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 Carlyle or our personnel. Moreover, the SEC has specifically focused on the private investment fund industry. Carlyle is
regularly subject to examinations and requests for information and informal or formal investigations by the SEC and other
regulatory authorities, with which we routinely cooperate and, in the current environment, even historical practices that have
been previously examined are being revisited. Even if an investigation or proceeding did not result in a sanction or the sanction
imposed against Carlyle 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 Carlyle and our funds. While it is difficult to predict what
impact, if any, the foregoing may have, there can be no assurance that any of the foregoing, whether applicable to Carlyle
specifically, our investment advisers or our funds, would not have a material adverse effect on our funds and their ability to
achieve their investment objectives.
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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
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. There
may also 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 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.
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 represented 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
increased regulatory capital requirements for certain investment firms and imposed 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 BV, 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 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-
assimilated Markets in Financial Instruments Directive (as restated, “MiFID II”), namely CECP, CELF, and AlpInvest UK.
Under the IFPR, among other requirements, CECP, CELF, and AlpInvest UK 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 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. Further changes to prudential requirements and remuneration that are likely to be relevant to CECP, CELF, and
AlpInvest UK are expected.
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 assimilated it into 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 BV, one of our subsidiaries,
obtained authorization in 2015 and is licensed as an AIFM in the Netherlands. Moreover, in 2014, 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, and comes into effect from April 16,
2026, 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-end 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.
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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(s) of the AIFM
and any relevant AIF(s) have not 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 BV,
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, 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 directly replicated in the UK. However, the FCA and HM Treasury are progressing their own reforms to
the UK’s domestic version of AIFMD in 2026, which is expected to increase divergence between the UK and EU regimes and
may increase our operational costs in the future.
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 harmonized 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 BV.
Certain EEA jurisdictions may also allow non-EU AIFMs to submit such notifications and pre-market AIFs.
EU Market Integration Package . On December 4, 2025, the European Commission published a set of wide-ranging
legislative proposals which have collectively been labelled the “Market Integration Package” or “MIP.” The MIP proposals
have the overall objective of further integrating EU financial markets by breaking down barriers to cross-border business. In
addition, the MIP proposals set out to amend (amongst other legislation) AIFMD and the CBDF Directive and the CBDF
Regulation. The MIP proposals are also aimed at harmonizing key obligations that affect market participants operating in the
EU, including marketing and pre-marketing, cross border management of AIFs, delegation and operating requirements, and
investor disclosures and reporting. Although the MIP proposals are intended to reduce complexity, they could have an impact
on the operating requirements of EU AIFMs, including CIM Europe and AlpInvest BV, with respect to potential rules of
conduct and prudential rules, which if implemented in their current form, could increase our compliance costs in future. The
MIP proposals are expected to come into effect, at the earliest, in the second half of 2027.
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
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 are subject to more onerous data collation and reporting requirements. As a
result, Solvency II may have an adverse indirect effect on our businesses by, among other things, restricting the ability of
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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. On September 22, 2021, the European Commission published proposed
legislation to amend the Solvency II Directive, which was subsequently approved by the European Parliament and the Council
of the EU. The amending directive was published on January 8, 2025, and its measures take effect (at the latest) from January
30, 2026. The new provisions are aimed at helping insurers to provide more long-term financing for the real economy,
simplifying the rules for smaller and less complex insurers, and maintaining a robust supervisory framework. These
amendments are not expected to be implemented in the UK. Post-Brexit, Solvency II was assimilated into UK law and has
undergone its own reform to simplify the administrative and reporting requirements, reduce costs and widen the categories of
assets which insurers can hold in their portfolios, which entered into force by December 31, 2024. It is unclear at this stage the
extent to which the amendments to Solvency II in the EU and the UK will have an indirect effect 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 assimilated into UK law (subject to certain amendments to ensure it operates
properly in a UK-specific context). 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 BV and CIM Europe.
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 . The EU and UK anti-money laundering (“AML”) and counter-terrorist financing (“CTF”)
rules regulate our obligations in respect of customer due diligence measures (“CDD”), among other requirements. Both the EU
and UK regimes are subject to change. A new EU AML and CTF framework is expected to replace the existing Fourth Money
Laundering Directive (EU) 2015/849 (“MLD4”) and to be fully operational by 2028. The new framework seeks to establish a
central European authority for Anti-Money Laundering and Countering the Financing of Terrorism (“AMLA”) and a single EU
AML and CTF rulebook, including more granular and directly applicable rules on CDD. MLD4 is intended to be replaced by
Directive (EU) 2024/1640 (“MLD6”) and Regulation (EU) 2024/1624 (“AML Regulation”), both of which shall apply from
July 10, 2027. Further details are to be included in the form of Regulatory Technical Standards, many of which are expected to
be finalized, at the earliest, in 2026, and to impact our policies and practices. The UK is not implementing equivalent EU
reforms and has consulted separately on amendments to the UK’s AML/CTF regime. Further divergence between the UK and
EU rules relating to AML/CTF is expected, which we continue to monitor and assess and could increase our operating costs.
UK Anti-Fraud Laws . The UK’s Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) has created a
new offense of “failure to prevent fraud” (“FTPF”), which came into effect on September 1, 2025. This new offense is broadly
modeled on existing offenses for “failure to prevent bribery” and “failure to prevent the facilitation of tax evasion.” The FTPF
offense imposes criminal liability on bodies corporate and partnerships meeting specified size thresholds (i.e. “large
organizations”) where an “associate” (i.e., employee, agent, subsidiary undertaking, or person who provides services for or on
behalf of the organization) commits a UK fraud offense. The relevant body will have a defense where it has in place reasonable
fraud prevention policies and procedures (or if it was not reasonable to expect the body to have any prevention procedures in
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place). ECCTA uses complex definitions and, as such, certain of our fund structures and portfolio companies could be in scope.
We continue to consider the potential impact of FTPF on our business and policies and procedures via our periodic risk
assessment processes.
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 adopted the Securitization Regulation notwithstanding Brexit but
has since diverged to create a UK-specific regime. The UK’s Securitization Regulations 2024 (“UK Securitization Regulation”)
came into force on November 1, 2024, with transitional provisions applicable to earlier securitizations. The UK Securitization
Regulation differs from the EU’s version in a number of ways, including with respect to due diligence, transparency, and risk-
retention rules. We will continue to monitor the potential application of both the EU and UK securitization regulations to our
investment activities and entities within the group.
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. Our funds and entities are
subject to the EU Sustainable Finance Disclosure Regulation (2019/2088) (the “SFDR”) and a regulation on the establishment
of a framework to facilitate sustainable investment (2020/852) (the “Taxonomy Regulation”). The SFDR requires transparency
with regard to the integration of sustainability risks, the consideration of adverse sustainability impacts, and the provision of
sustainability-related information with respect to alternative investment funds. The Taxonomy Regulation contains criteria for
determining whether economic activities qualify as environmentally sustainable. For that purpose, in-scope asset managers are,
among other things, required to disclose the degree to which financial products invest in environmentally sustainable
investments. Such regulation and guidance are evolving and compliance with new requirements may create additional
compliance burdens and costs to our funds and business, including in respect of SFDR, where the European Union is
undertaking a legislative process to reform SFDR and related regulations.
On November 20, 2025, the European Commission published its proposals for amending the SFDR, which are
commonly referred to as “SFDR 2.0.” These proposals introduce a formal labeling regime subject to eligibility requirements,
among other requirements. SFDR 2.0 is progressing through the EU’s legislative process and is subject to change. The revised
framework will likely be operational in 2028, at the earliest. It is unclear to what extent the changes proposed by SFDR 2.0
could impact our funds, including their investment strategies and portfolio composition in the future. Our funds may be required
to be categorized by reference to different criteria under SFDR 2.0, which may adversely impact future capital raising from
investors and investment returns. Compliance with any new requirements 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 amended 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.
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 was expected to 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. However, on December 16, 2025, the European
Parliament approved the text of the “Sustainability Omnibus,” which includes amendments (among others) to the CSRD, which
are likely to remove many entities from scope of the reporting requirements. The final text is expected to be published in the
first half of 2026, and we are continuing to assess the impact of the changes on our business, funds and portfolio companies.
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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, with disclosures made annually by June 30, each year.
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 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 may undertake a further consultation on expanding the
scope of these requirements to potentially 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. 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 or non-UK entities 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. In August 2025, HM Treasury published a policy statement on changes to the UK
Appointed Representatives regime confirming, among other things, that acting as principal for an appointed representative will
require FCA permission. It is currently unclear when such changes will come into effect, and we intend to continue to work
with external counsel and advisors to monitor any related developments and impacts on our business.
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.
For example, the Bank of England’s Financial Stability Board, in 2024, issued its consultation report on leverage in non-bank
financial intermediation (“NBFI”) with policy recommendations for supervisory authorities to monitor and address financial
stability risks from leverage, including: public and private disclosures; activity-based measures such as minimum haircuts and
enhanced margining requirements; entity-based measures such as concentration and large exposure limits and leverage limits;
and adopting an approach of “same risk, same regulatory treatment” for NBFI leverage and leverage from other, similar
exposures.
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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 were required to adopt and apply measures implementing the CSPD by
December 30, 2023, and entities carrying on credit servicing activities from December 30, 2023, were 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 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) 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 agents 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,
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 commitment and/or 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”) and the
supervision of local governments (if applicable). If a private equity fund wishes to accept commitment and/or 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 National Financial Regulatory
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Administration (the “NFRA”). In accordance with the NDRC’s regulations and local government regulations (if applicable) 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,
return investment, 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, the local governments (if applicable) and/or the NFRA (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—Rapidly developing and changing global data security and privacy laws and regulations could increase compliance
costs and subject us to enforcement risks and reputational damage” 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
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, an executive order established an outbound investment screening regime (the “Outbound Order”),
which was intended to regulate or prohibit certain investments by U.S. persons in advanced technology sectors in jurisdictions
that may be designated as a “country of concern.” In January 2025, the current U.S. Presidential administration signed an
Annex to the Outbound Order that identified China, along with the Special Administrative Regions of Hong Kong and Macau,
as a “country of concern.” Similarly, in February 2025, the U.S. Presidential administration issued a memorandum to various
regulatory agencies regarding enhanced restrictions on outbound investments into China, as well as on Chinese investments into
the United States. These actions could negatively impact our ability to raise capital from and deploy capital in such
jurisdictions, including if the administration seeks to expand such limitations to apply to a broader range of activities. In
addition, a number of U.S. states are passing and implementing state laws prohibiting or otherwise restricting the acquisition of
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interests in real property located in the state by foreign persons. These laws may also impact the ability of certain non-U.S.
limited partners to participate in certain of our investment strategies.
Our funds’ 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
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 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
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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, activist, and regulatory 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 regulatory requirements, 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
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 individual 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.
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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 service
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 a number of
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.
We are subject to U.S. and foreign anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices
Act, as amended (“FCPA”), as well as anti-money laundering laws. Any determination that we have violated the FCPA, the EU
and UK anti-money laundering regimes, 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 these
could adversely affect our business prospects, financial position, or the price of our common stock. Although the current U.S.
Presidential administration has signed an executive order to pause, subject to certain exceptions, the initiation of new
investigations and enforcement actions under the FCPA, such laws have attracted significant regulatory focus in recent years,
including outside of the United States. For example, the SEC will be responsible for examining investment advisers’
compliance with a U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) rule scheduled to go
into effect January 2028 (delayed from January 2026), which requires registered investment adviser and exempt reporting
advisers to, among other measures, adopt an anti-money laundering and countering the financing of terrorism (“AML/CFT”)
program, file certain reports with FinCEN, and maintain records related to such activities. The application of these rules would
impose significant compliance costs on us. The EU and the UK also are revising their respective anti-money laundering
regimes. The EU’s revised anti-money laundering regime is expected to come into effect as early as June 2026, and the UK has
also 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 anti-money laundering and other applicable laws, such policies and
procedures may not be effective in all instances to prevent violations. In addition, in light of the executive order to pause
initiation of new FCPA investigations and enforcement actions in the United States, other asset managers, particularly those
who, unlike us, are not subject to the anti-corruption laws of a jurisdiction outside of the United States, may implement changes
to their FCPA or anti-money laundering policies that would provide such managers access to investment opportunities that may
not be available to us because of our current policies and procedures.
Moreover, we 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 could also 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 could also 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. We also may face an
increased risk of such misconduct to the extent our funds’ investment in non-U.S. markets, particularly emerging markets,
increases.
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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 Carlyle AlpInvest, we have established an information
barrier between the management teams at Carlyle AlpInvest and the rest of Carlyle. See “Risks Related to Our Business
Operations—Risks Related to the Assets We Manage—Carlyle AlpInvest 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, and ability to execute quickly, 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 or vice versa. 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 funds’ 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. Competition is based on a variety of factors, including
investment performance, quality of client service, investor availability of capital and willingness to invest, fund terms
(including fees and liquidity terms), brand recognition, and business reputation. Our asset management business competes with
a number of private funds, specialized investment funds, funds structured for individual investors, 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). W e expect that competition will continue to increase. For example,
certain traditional asset managers have developed their own private equity and private wealth platforms and are marketing other
asset allocation strategies as alternatives to our investments. A number of factors serve to increase our competitive risks,
including, among others:
• a number of our competitors 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;
• 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 access to funding sources that are not available to us, which may create
competitive disadvantages for us with respect to investment opportunities;
• 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 cost 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 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 to seek exit opportunities through different channels;
• some of our competitors may be more successful than us in development of new or customized products to
address investor demand for new or different investment strategies and/or regulatory changes, including with
respect to private credit products and products that are developed for individual investors or that target
insurance capital;
• in order to broaden distribution of their private wealth products, some of our competitors may be willing to
pay higher placement, servicing, or other forms of distributor fees, which may adversely impact the amount of
capital we are able to raise in the private wealth channel;
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• there are relatively few barriers to entry impeding new alternative asset managers, and the successful efforts
of new entrants, 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 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;
• corporate buyers may be able to achieve synergistic cost savings in respect of an investment, which may
provide them with a competitive advantage relative to us when bidding for an investment;
• 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; 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, 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 we are 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, as part of a shift in the distribution arrangements
in the private wealth industry, certain third-party intermediaries have sought to revise existing, or implement new, fee
arrangements that align their fees with the initial amount or ongoing net asset value of capital invested through the intermediary
in the applicable vehicle. While the extent of this shift going forward is uncertain, the costs associated with the distribution of
certain of our private wealth products have increased, and there may be further increases in distribution costs for these and
future products. The reduction of net management fees or performance allocations we receive, including as a result of new fee
arrangements, or the incurrence of higher costs in connection with product distribution, without corresponding decreases in our
cost structure, would adversely affect the profitability of impacted products. Certain of the third-party intermediaries on whom
we rely to distribute our investment products also sell their own competing proprietary investment products, which could limit
the distribution of our products.
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. Conversely,
regulatory measures aimed at reducing burden on U.S. banks, such as less onerous bank regulatory capital requirements, may
create additional competition for certain of our credit strategies. 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 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
our revenue or require us to record an impairment of intangible assets and/or goodwill in the case of an acquired business. In
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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,
which may result in little or no carried interest due to performance hurdles; 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 may also 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. Moreover, these hedging arrangements may generate
significant transaction costs, including potential tax costs, that 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. The CFTC also 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,
and may in the future further increase, tariffs on certain foreign goods from China, Canada, Mexico, and certain European
countries, among other countries. The administration has also threatened or targeted a broader array of countries with punitive
trade measures, such as universal steel and aluminum tariffs and reciprocal tariffs. Some foreign governments, including China,
Canada, and Mexico, have threatened or instituted retaliatory tariffs on certain U.S. goods. While the United States has reached
an agreement with several countries to either delay or lower the imposition of such tariffs, the administration has also indicated
that they could be reinstated. Tariffs on goods imported from China, Canada, Mexico, and Europe could further increases costs,
decrease margins, and reduce the competitiveness of products and services offered by current and future portfolio companies.
Such tariffs could adversely affect the revenues and profitability of select companies whose businesses rely on goods imported
from countries that are subject to significant tariffs. Further governmental actions related to the imposition of tariffs or other
trade barriers or changes to international trade agreements or policies in respect of other jurisdictions could also have a similar
adverse impact.
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 has also 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 trade escalation 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 further actions that may be taken under the current U.S. Presidential administration
with respect to U.S. trade policy, including with respect to tariffs on goods from Canada and Mexico, among other countries.
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 business depends in large part on our ability to raise capital from third-party investors. A failure to raise capital from
third-party investors on attractive fee terms, or at all, would impact our ability to collect management fees or deploy such
capital into investments and potentially collect carried interest, which would materially reduce our revenue and cash flow
and adversely affect our financial condition.
Our ability to raise capital from third-party investors depends on a number of factors, such as economic and market
conditions (including the level of interest rates and stock market performance) and the asset allocation rules or investment
policies to which such third-party investors are subject. These factors could inhibit or restrict the ability of third-party investors
to make investments in our funds or the asset classes in which our funds invest. For example, lawmakers across a number of
states have put forth proposals or expressed intent to take steps to reduce or minimize the ability of their state pension funds to
invest in alternative asset classes, including by proposing to increase the reporting or other obligations applicable to their 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,
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which may further impair our access to capital from an investor base that has historically represented a significant portion of
our fundraising.
In addition, volatility in the valuations of investments has in the past and may in the future affect our ability to raise
capital from third-party investors. To the extent periods of volatility are coupled with a lack of realizations from investors’
existing portfolios, such investors may be left with disproportionately outsized remaining commitments to a number of
investment funds. This significantly limits such investors’ ability to make new commitments to third-party managed investment
funds such as those managed by us. In addition, during periods of market volatility, investor subscription requests may be
reduced and investor redemption or repurchase requests may be elevated in products that permit redemption or repurchase of
investor interests. Certain of our investment vehicles that are available to individual investors are also subject to state
registration requirements that impose limits on the proportion of such investors’ net worth that can be invested in our products.
These restrictions may limit such investors’ ability or willingness to allocate capital to such products and adversely affect our
fundraising in the private wealth channel. See “Risks Related to Our Business Operations—Risk Related to the Assets Re
Manage—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.”
Likewise, our ability to raise new funds could be hampered if the general appeal of alternative investments were to
decline. An investment in a limited partner interest in an alternative investment fund is generally 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. In periods of positive markets and low volatility, for example, investors may favor passive investment strategies such as
index funds over our actively managed investment vehicles. Similarly, during periods of high interest rates, investors may favor
investments that are generally viewed as producing a risk-free return, such as treasury bonds, over investments in our products,
particularly if the spread between the products declines. Alternative investments could also fall into disfavor because of
concerns about liquidity and short-term performance. In particular, such concerns could be exhibited by public pension funds,
which have historically been among the largest investors in alternative assets. Many public pension funds are significantly
underfunded, and their funding problems have been, and may in the future be, exacerbated by economic downturn. Concerns
with liquidity could cause such public pension funds to reevaluate the appropriateness of alternative investments. Moreover, our
ability to raise capital from third parties outside of the United States could be limited to the extent the other countries impose
restrictions or limitations on outbound foreign investment.
Certain institutional investors are also demonstrating a preference to insource 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. As some existing investors cease or significantly
curtail making commitments to alternative investment funds, we may need to identify and attract new investors to maintain or
increase the size of our investment funds. We may be unable to find or secure commitments from those new investors and the
fee terms of the commitments from such new investors may not be consistent with the fees historically paid to us by our
investors. If economic conditions were to deteriorate or if we are unable to find new investors, we might raise less than our
desired amount for a given fund. In addition, as we seek to expand into other asset classes, we may be unable to raise enough
capital to adequately support such businesses. A failure to successfully raise capital could materially reduce our revenue and
cash flow and adversely affect our financial condition.
In connection with raising new funds or making 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 managed, or funds managed by our competitors,
including with respect to management fees, incentive fees, and/or carried interest, which could have an adverse impact on our
revenues. Such terms could also restrict our ability to raise investment funds with investment objectives or strategies that
compete with existing funds, add additional expenses and obligations for us in managing the fund, or increase our potential
liabilities, all of which could ultimately reduce our revenues.
While we have no obligation to modify any of our fees with respect to our existing funds, we may experience pressure
to do so in our funds, including in response to regulatory focus by the SEC on the quantum and types of fees and expenses
charged by private funds. We have confronted and expect to continue to confront requests from a variety of investors and
groups representing investors to decrease fees, which could result in a reduction in the fees and carried interest we earn.
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We have increasingly undertaken business initiatives to increase the number and type of investment products we offer to
individual investors, which could expose us to new and greater levels of risk.
Although individual 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 individual investors in the United States, some of whom are not accredited
investors, or similar investors in non-U.S. jurisdictions, including in certain markets in Europe and Asia-Pacific . 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 individual investors and offering products directed at such investors exposes us to 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 of 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 regulatory 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 individual investors access
our investment products, we do not control and have limited information regarding many of these third-party channels.
Therefore, 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
engage with 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.
Such allegations or actions may be 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 individual investors outside of the United States, we are increasingly
exposed to risks in non-U.S. jurisdictions. In addition to risks similar to those that we face 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 market practices that vary by local jurisdiction. As a result, this expansion
subjects us to additional complexity, litigation, and regulatory risk.
Our initiatives to expand our individual investor base, including marketing, creating, and maintaining the types of
products and vehicles that individual investors may invest in, may not be successful. Such initiatives include the hiring of
additional personnel and the implementation of new operational, technological, compliance, and other systems and processes,
each of which require significant time, effort, and resources. In addition, in light of the August 2025 Executive Order on
Democratizing Access to Alternative Assets for 401(k) Investors, there may be significant future opportunity for the alternative
asset management industry to increase the distribution of products to individual investors. Accordingly, we are likely to face
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significant competition in addressing such opportunity, which will require us to spend substantial time, effort, and resources,
and may not ultimately be successful in increasing distribution of our products in this channel.
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. 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.
At the end of the life of any of our Global Private Equity and Global Credit carry funds (or earlier with respect to
certain of our funds), we may 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 includes situations in which the carry fund has
not achieved investment returns that exceed the preferred return threshold or the general partner receives net profits over the life
of the fund in excess of its allocable share under the applicable partnership agreement. This repayment obligation is known as a
“giveback” obligation.
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
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.
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. 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—
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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 Carlyle 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 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.
Carlyle 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 without cause.
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
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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
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, comparable market transactions, 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.
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While the fair values of investments in our funds are generally determined quarterly, certain of our products are
required to determine net asset values on a more frequent basis, such as monthly or daily, for purposes of establishing the price
at which the fund sells its units. While the investment values in these funds are adjusted to incorporate the latest financial
information as well as broader market-driven events, there is risk that rapidly changing market conditions or material events
may not be immediately reflected in the respective fund’s net asset value used for pricing.
The due diligence process that we undertake in connection with investments by our funds may not reveal all facts that may
be relevant in connection with an investment.
When evaluating a potential business or asset for investment, we conduct due diligence that we deem reasonable and
appropriate based on the facts and circumstances applicable to such investment. In particular, when conducting due diligence,
we may be required to evaluate important and complex issues, including but not limited to those related to business, financial,
credit risk, tax, accounting, sustainability, legal, and regulatory and macroeconomic trends. With respect to sustainability, the
nature and scope of our diligence will vary based on the investment, but may include a review of, among other things: energy
management, air and water pollution, land contamination, human capital management, human rights, employee health and
safety, accounting standards, and bribery and corruption. Selecting and evaluating such factors is subjective by nature, and there
is no guarantee that the criteria utilized or judgment exercised by us or a third-party specialist (if any) will reflect the policies or
preferred practices of any particular investor or align with the practices of other asset managers or with market trends. The
materiality of various risks and impact of such risks on an individual potential investment or portfolio as a whole depend on
many factors, including the relevant industry, geography and asset class, and the nature of the investment. Outside consultants,
legal advisers, accountants, and investment banks may be involved in the due diligence process in varying degrees depending
on the type of investment. The due diligence investigation that we will carry out with respect to any investment opportunity
may not reveal or highlight all relevant facts (including fraud) or risks that may be necessary or helpful in evaluating such
investment opportunity, and we may not identify or foresee future developments that could have a material adverse effect on an
investment, including, for example, potential factors, such as technological disruption of a specific company or asset, or an
entire industry, including as a result of the rapid development and implementation of AI Technologies. See “Risks 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.”
In addition, some matters covered by our diligence, such as sustainability, are continuously evolving, and we may not
accurately or fully anticipate such evolution. The framework we may use to evaluate certain diligence considerations may not
represent a universally recognized standard for assessing such considerations. For example, AIFMD requires us to identify,
measure, manage, and monitor sustainability risks relevant to the funds managed by our EU AIFMs and take into account
sustainability risks when performing investment due diligence. Such requirements may make our funds less attractive to
investors, and any non-compliance with such requirements may subject us to regulatory action. Moreover, when conducting due
diligence on investments, including with respect to investments made by our funds, we rely on the resources available to us and
information supplied by third parties, including information provided by the target of the investment. The information we
receive from third parties may not be accurate or complete and therefore we may not have all the relevant facts and information
necessary to properly assess and monitor our funds’ investment.
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
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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—
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.” Su ch 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
• 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.
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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.
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 175 basis points as of December 31, 2025 . However, going
forward, base interest rates may not decline as much as anticipated or could even increase again if inflation does not converge
sufficiently towards its target. Persistently large fiscal deficits and high levels of economywide capital expenditures have
increased longer-dated yields even as the Federal Reserve has reduced the policy rate. 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. 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
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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 asset management activities involve investments in relatively illiquid assets, and we may fail to realize any profits from
these activities for a considerable period of time.
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,
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.
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.
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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 located outside 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:
• currency exchange matters, including fluctuations in currency exchange rates and costs associated with
conversion of investment principal and income from one currency into another;
• less developed or efficient financial markets than in the United States, which may lead to potential price
volatility and relative illiquidity;
• 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 funds’ investments;
• a less developed legal or regulatory environment, differences in the legal and regulatory environment, or
enhanced legal and regulatory compliance;
• heightened exposure to corruption risk and/or economic sanction risk in certain non-U.S. markets;
• political hostility to investments by foreign or private equity investors;
• reliance on a more limited number of commodity inputs, service providers, and/or distribution mechanisms;
• more volatile or challenging market or economic conditions, including higher rates of inflation;
• higher transaction costs;
• difficulty in enforcing contractual obligations;
• fewer investor protections and less publicly available information about companies;
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• 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,
terrorist attacks, political, economic or social instability, the possibility of expropriation or confiscatory
taxation, and adverse economic and political developments; and
• the possible imposition of non-U.S. taxes or withholding on income and gains recognized with respect to such
securities.
In addition, investments in companies that are based outside of the United States may be negatively impacted by
restrictions on international trade or the imposition of tariffs (and any resulting reciprocal tariffs), which have been an area of
focus for the current U.S. Presidential administration. 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.”
Our equity investments and some of our debt investments rank junior to investments made by others, exposing us to a
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 are 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
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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. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the value and liquidity of securities rated below investment grade or otherwise
adversely affect our reputation.
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
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.
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
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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
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;
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• 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;
• 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 funds may be forced to dispose of investments at a disadvantageous time.
Our funds may make investments that are not advantageously disposed of prior to the date the applicable fund is
dissolved, either by expiration of such fund’s term or otherwise. Although we generally expect that our funds will dispose of
investments prior to dissolution or that investments will be suitable for in-kind distribution at dissolution, we may not be able to
do so. The general partners of our funds have only a limited ability to extend the term of the fund with certain consent
provisions and, therefore, we may be required to sell, distribute, or otherwise dispose of investments at a disadvantageous time
prior to dissolution. This would result in a lower than expected return on the investments and potentially on the fund itself.
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 tariffs,
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 fell 7.3% in 2025 on a broad trade-
weighted basis, with losses concentrated in the first half of the year. While a weaker dollar is favorable to U.S. exporters and
corporates with significant foreign revenues, it can depress the profits of companies in Europe and Asia that rely on exports to
the U.S. market. The weaker dollar also exacerbates the impact of recently imposed tariffs for those U.S. companies that rely on
imports as inputs into their businesses.
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. 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 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
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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. CLOs invest on a leveraged basis in loans or securities that are themselves highly leveraged investments, which
increases both the opportunity for higher returns as well as the magnitude of losses compared to unlevered investments. As a
result of such funds’ leverage position, CLOs are at increased risk of suffering losses. I nvestments 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 CLOs.
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 as equity holder or manager. The
collateral itself may decline in value, default, or be downgraded and changes in the collateral 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 may experience greater price volatility than
the individual assets that comprise the CLO collateral. In addition, CLOs and other structured finance securities are subject to
prepayment risk. 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, the availability of any credit enhancement, the level and timing of
payments and recoveries on and the characteristics of the underlying collateral, the adequacy of and ability to realize upon any
related collateral, and the capability of the collateral manager. There are also risks that the trustee or administrator of a CLO
does not properly carry out its duties to the CLO, potentially resulting in losses. Moreover, the complex structure of a CLO may
produce unexpected investment results, especially during times of market stress or volatility.
We earn management fees from our CLOs, including subordinated fees . The subordinated fees 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. Worsening credit conditions and/or a deterioration in loan performance generally leads to defaults or
downgrades of a CLO’s underlying collateral obligations, downgrade of a CLO’s rated securities, and possible failure of one or
more overcollateralization tests and/or interest diversion tests, which could divert funds otherwise available to pay management
fees to instead be used to either pay down the principal on the securities issued by the CLO in an amount necessary to cause
such tests to pass or purchase sufficient collateral in an amount necessary to pass such tests. If either of these scenarios
occurred, it could 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 Carlyle AlpInvest business is subject to additional risks.
Our Carlyle AlpInvest business is subject to additional risks, including the following:
• Carlyle AlpInvest 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. In addition, the business is separated from the rest of the
firm by an informational wall designed to prevent certain types of information from flowing from the Carlyle
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AlpInvest platform to the rest of the firm. This information barrier limits the collaboration between our
investment professionals with respect to specific investments, and may impair our ability to offer services to
investors that are provided across our business segments.
• Pursuant to our current arrangements with the various businesses, we restrict our participation in the
investment activities undertaken by our Carlyle AlpInvest segment (including with respect to AlpInvest),
which may in turn limit our ability to address risks arising from their investment activities . For so long as
these arrangements are in place, we will observe substantial restrictions on our ability to access specific
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 with management. Generally, we have a
reduced ability to identify or respond to investment and other operational issues that may arise within the
Carlyle AlpInvest business, relative to other Carlyle investment funds.
• Similar to other parts of our business, Carlyle AlpInvest is seeking to broaden its investor base by raising
funds and advising separate accounts for investors on an account-by-account basis, including continuously
offered funds for the private wealth channel that are typically highly regulated products. The number and
complexity of such investor mandates and fund structures have increased as a result of continuing fundraising
efforts, and the activation of mandates with existing investors.
• Conflicts may arise between such Carlyle AlpInvest funds and separate managed accounts (e.g., competition
for investment opportunities), and in some cases conflicts may arise between a Carlyle AlpInvest fund or
managed account and a Carlyle fund. In addition, certain managed accounts and funds have different or
heightened standards of care, and if they invest in other investment funds sponsored by us it could result in
lower management fees and carried interest to us than Carlyle’s typical investment funds.
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 and defaults by tenants or borrowers;
• changes in building, environmental, zoning, and other laws;
• restrictive covenants, encumbrances, and other land or use restrictions;
• failure to obtain necessary approvals and/or permits;
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• 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 sever ity 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, price disclosure, and
climate change), litigation from public or private parties relating thereto, and changes in market practices in
consideration of the foregoing;
• 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 (or claims from) third parties in connection with their contractual rights and obligations,
including ground lessors, ground lessees, landlords, tenants, partners, and property managers;
• 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 face risks that can affect occupancy, rental income, expenses, or the sale
and financing of properties. These risks could worsen during future global health crises. When leases expire, vacancies may
create gaps in rental income while fixed costs — such as interest, taxes, and maintenance —persist. Weak economic conditions
can make it harder to secure new tenants or maintain rental rates, and increased competition may require unplanned capital
improvements that reduce cash available for investor distributions. Investments in residential real estate may face greater
volatility and sensitivity to market and economic conditions than commercial properties. Ownership of real assets also carries
potential environmental liabilities. Our funds may be held responsible for cleanup costs or damages under strict liability laws,
even without fault. Changing environmental regulations or conditions can create new liabilities, and indemnities from sellers
may prove unenforceable or financially unreliable.
Our funds may also invest in real estate-related operating companies—such as logistics hubs, data centers, or event
venues—which face operational risks similar to those encountered in our buyout and growth funds. Real estate market
downturns, rising capitalization rates, and restricted financing can reduce property values. Investments in undeveloped or
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underdeveloped land bring additional risks tied to zoning approvals, construction delays, cost overruns, and financing
challenges. Many properties are managed by third parties, exposing the funds to risks from their performance and reliability.
Commercial real estate financing often involves non-recourse carveout guarantees and environmental indemnities,
allowing lenders to recover losses for misconduct or environmental harm. Such guarantees may also include interest or payment
commitments, potentially impacting fund or firm assets if called upon. The acquisition, ownership, and sale of real estate assets
carry litigation risks. Claims may arise from prior ownership periods, failed transactions, or post-sale disputes over defects or
due diligence matters.
Our funds’ investments in real estate-related assets, including real estate investment trusts (“REITs”), face additional
exposure to changes in property values, tenant defaults, tax law modifications, or failure to maintain REIT qualification—all of
which could diminish cash available for distribution. Real estate debt investments can be unsecured, subordinated, or lack
protective covenants. Non-performing loans often require restructuring that may reduce principal or interest. Mortgage loan
defaults carry foreclosure and deficiency risks. Distressed assets may generate little or no cash flow and may be further
impaired by bankruptcy or insolvency proceedings.
Moreover, there is increased political attention at the state and national level on home ownership and housing
affordability. In this regard, the U.S. government, and the governments of several U.S. states, are evaluating, implementing,
and/or have implemented measures to regulate institutional and corporate investment in and ownership of residential property
and it is expected that other similar actions may be taken by the states or other levels of government and that additional federal
level actions could be taken in this regard (collectively, “Residential Ownership Laws”). For example, on January 20, 2026, the
U.S. President issued Executive Order 14376, which sets forth a policy that large institutional investors not buy single-family
homes that could otherwise be purchased by families, and directs or requests various administrative, rulemaking, and legislative
processes be initiated to effectuate such policy. These Residential Ownership Laws could have a negative impact on a fund’s
ability to implement its investment approach and achieve its objective, including with respect to certain categories of residential
property or within certain U.S. states implementing such laws.
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 invest in oil and gas production, development, and exploration, which is speculative and involves a
high degree of risk, including, among others: the use of new technologies; reliance on estimates of oil and gas reserves based on
geological, geophysical, engineering, and economic data; unexpected formations or pressures, premature reservoir declines,
blow-outs, equipment failures and other accidents, sour gas releases, uncontrolled flows, adverse weather, pollution, fires,
spills, and other environmental risks; volatility in oil and natural gas prices and the resulting impact on demand for related
products and services (including climate-driven demand shifts) ; and potential contributions to climate change, and resulting
regulatory and stakeholder scrutiny.
Oil, gas, and product prices and related margins are highly volatile due to international supply-demand dynamics,
political and geopolitical developments (including global conflicts), technological change, macroeconomic conditions, public
health risks, and changes in the influence of the Organization of Petroleum Exporting Countries, and this volatility has affected
and is likely to continue to affect the financial performance, financing availability, asset prices, and valuations of our current
and future investments exposed to energy prices, whether as consumers or producers. Oil and natural gas prices also fluctuate in
response to macroeconomic trends, trade developments, inventory levels, global demand and supply expectations, market
uncertainty and speculation, consumer demand, refining capacity, weather, domestic and non-U.S. regulations (including
sanctions), currency movements, the price and availability of alternative fuels, regional political conditions, non-U.S. suppl y of
oil and natural gas, import prices, and overall economic conditions. In addition, local realizations can vary widely due to
production characteristics and the availability of gathering, transportation, processing, and storage infrastructure. Sharp price
declines, failure to sustain upward momentum, prolonged dislocations, elevated prices or adverse changes in host-country fiscal
regimes for energy producers also could negatively affect our portfolio.
To help manage these risks, we work with a subset of portfolio companies on climate and energy-transition initiatives,
including measuring, monitoring, and managing carbon emissions, setting decarbonization goals and pathways, and considering
investments in new technologies to build long-term value and respond to changing market dynamics, although there is no
guarantee these efforts will be successful.
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Investments in the natural resources industry, including the infrastructure, energy, power, and renewables industries,
involve various operational, construction, and regulatory risks.
Our natural resources, infrastructure, energy, power, and renewables investments involve significant construction,
operational, regulatory, environmental, and market risks, any of which could materially affect performance and value.
Natural Resources. Natural resources portfolio companies may experience labor and fuel or material shortages,
construction delays and cost overruns, permitting delays, adverse weather and site conditions, equipment failures and accidents,
financing challenges, and force majeure events, which can cause unexpected delays, higher debt service, insufficient funds to
complete projects, limited cash flow during development, operating deficits, lost revenues, increased operating and maintenance
costs, and construction-related claims.
Infrastructure. Infrastructure investments face risks from changes in input costs and availability, political and
regulatory actions (including climate initiatives), macroeconomic conditions, demographic and demand shifts, competition,
natural disasters and weather changes, major customer distress, and war or terrorism, which can reduce revenues, increase costs
to build, operate, maintain, or restore assets, impair debt repayment and distributions, or lead to termination of concessions, and
insurance may not fully cover resulting losses. Infrastructure assets are also subject to extensive and discretionary government
regulation and often depend on permits, licenses, concessions, leases, and contracts that give government counterparties
significant influence, including the ability to impose restrictive terms or terminate arrangements without adequate
compensation, which can limit a portfolio company’s ability to maximize cash flow and profitability.
Energy and Power. Energy and power investments are exposed to operational risks such as mechanical or structural
failures, accidents, labor issues, or underperforming technology , as well as external factors such as economic developments,
changes in fuel or feedstock prices, government policies, and shifts in energy demand, any of which can reduce revenues,
increase costs, impair debt repayment, or necessitate decommissioning that may be lengthy and costly. Development-stage
investments including transmission and power facilities, face additional risks relating to timely zoning and regulatory
approvals, construction timing and cost (including weather, labor, and material risks), and access to construction and permanent
financing, which can cause delays, cost overruns, or failure to complete projects, adversely affecting a portfolio company’s
financial condition and results of operations.
Electric utility investments in the United States and abroad are also subject to increasing competitive pressures due to
changing consumer demand, technological advances, greater natural gas availability, and regulatory changes that may drive
consolidation or disaggregation of vertically integrated utilities, enabling additional significant competitors in the independent
power industry.
Investments in hydrocarbon producers face increasing climate‑related risks, as combustion of hydrocarbons emits
greenhouse gases, and regulators, investors, consumers, and other stakeholders are advancing or considering cap‑and‑trade
systems, carbon taxes, restrictive permitting, efficiency standards, climate‑related reporting, and incentives or mandates for
renewables, which can increase costs, lengthen project timelines, reduce hydrocarbon demand, shift demand to lower‑carbon
fuels, promote alternatives, and heighten activism, litigation, enforcement, and lender scrutiny, all of which may hinder
financing, exits, or expected returns. Our investments also depend on initial and ongoing regulatory approvals, licenses,
permits, and tax and financial rulings, and there is no assurance that portfolio companies will obtain, modify, or maintain all
required approvals. In this regard, delays or failures in satisfying associated conditions can prevent facility operations, restrict
sales, increase costs, and adversely affect returns.
Renewables . Renewable energy investments depend on complex resource and market estimates (such as solar
irradiance and wind or water flow), which are sensitive to changing assumptions and market conditions, and on supportive
government policies and incentives (including tax credits, grants, portfolio standards, renewable energy credits, and similar
programs in the United States, the European Union, and other jurisdictions). Any reduction, elimination, or reversal of such
support, or a shift toward more carbon‑intensive energy policies, could render projects uneconomic, harm renewable portfolio
companies’ financial condition and results and, conversely, policies favoring renewables may negatively affect non‑renewable
energy investments.
Environmental and health and safety laws, regulations, and initiatives (including climate‑related measures) materially
affect natural resources, infrastructure, energy and power, and renewable energy investments, as projects face changing and
increasingly stringent compliance and permitting requirements that can both create opportunities (for example, increased
demand for gas and renewables) and require significant expenditures that reduce returns, while regulatory authorities, NGOs,
and special interest groups continue to exert substantial oversight and influence.
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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
us, our funds, and our funds’ portfolio companies, and those higher costs may continue to increase if new laws require
additional resources. 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, also can 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. S ee “Risks Related to Our
Company—Adverse economic and market conditions and other events or conditions throughout the world could negatively
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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
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 “Reinsurance Counterparties”), certain of our subsidiaries receive performance fees and/or management fees
from carry funds and separately managed accounts into which Fortitude Re, its affiliates, and the Reinsurance Counterparties
invest. The Company and Fortitude own interests in FCA Re, a Bermuda-domiciled reinsurance company that reinsures
liabilities of affiliates of Fortitude and is a Reinsurance Counterparty. Through our subsidiaries, we managed or advised
$24.6 billion of capital attributable to investments made under these investment management agreements, as of December 31,
2025 . In addition, in April 2022 and December 2024, we entered into strategic advisory services agreements with certain
subsidiaries of Fortitude and an affiliate of FCA Re, respectively, through our insurance investment advisor, Carlyle Insurance
Solutions Management L.L.C. (“CISM”). Under the agreements, CISM provides the clients 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 the client’s general account assets, which, with respect to the agreement with Fortitude’s
subsidiaries, 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 Reinsurance Counterparties
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 Reinsurance Counterparties. 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 Reinsurance Counterparties 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 funds’ investments in the life sciences industry may expose us to increased risks.
Investments in life sciences may expose us to increased risks. For example:
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• 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 funds’ 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 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.
• I ntellectual property often constitutes an important part of a life sciences company’s assets and competitive
strengths, particularly for royalty monetization and corporate partnership transactions. To the extent such
companies’ intellectual property positions with respect to products in which our life sciences business invests,
whether through a royalty monetization or otherwise, are challenged, invalidated, or circumvented, the value
of our life sciences business’s investment may be impaired. The success of a life sciences investment depends
in part on the ability of the biopharmaceutical companies in whose products our life sciences business 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 our life sciences business 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 addition, the Secretary of the Department of Health and Human Services has indicated
the potential for substantial policy and personnel changes. In general, as regulatory agencies and others
develop policies and continue to define and implement legislation, such policies and legislation may result in
lower product prices, altered market dynamics, lower consumer demand for certain products, or the
unavailability of adequate third-party payer reimbursement to enable our life sciences business to realize an
appropriate return on its investment.
• Our life sciences business’s strategies include its clinical co-development (CCD) strategy, which seeks to
generate investment returns by identifying and financing pharmaceutical drug candidates in late-stage
development through regulatory approval for a pharmaceutical or biotech counterparty, typically for a pre-
negotiated, structured return that is payable should regulatory approval be obtained. Our life sciences
business’s ability to source such transactions is dependent on its ability to identify, diligence, and agree to the
development funding arrangements with the counterparty in a competitive market. CCD investments are
typically made via investor subscriptions in a special purpose vehicle (SPV) that finances the relevant late-
stage clinical trial. There is a risk that the clinical trial does not result in approval by the relevant clinical
regulatory agency, for example as a result of failure to demonstrate efficacy, safety concerns, failure to recruit
trial subjects, or unforeseen regulatory concerns. If the clinical trial does not result in approval, then it is
highly likely that each investor in the SPV will lose its entire investment. In addition, such investments may
be exposed to losses in the event that the counterparty fails to meet its obligation to make contractually agreed
payments. If the trial achieves approval by the clinical regulatory agency, the counterparty’s payment
obligations will usually extend over a number of years. It may be possible to improve rates of return by
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monetizing the payments, but this may not always be possible. The returns available from successful CCD
transactions may also be capped by the terms agreed with the counterparty.
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 conflicts
and other events, including wars, civil disturbances, acts of terrorism, outbreaks of epidemic diseases 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 or bankruptcies and decreases in the creditworthiness of customers; technological innovation resulting
in older aircraft and engine models being retired or otherwise made obsolete; new-entrant manufacturers producing additional
aircraft that compete with existing models; production delays and supply chain issues impacting new aircraft delivery
schedules; aircraft groundings and other costs associated with 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 and increases in lease defaults, and may 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 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,
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 of 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, 2025 , our Chief Executive Officer held a total of 3.7 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 11.3 million
unvested restricted stock units outstanding as of December 31, 2025 . As of December 31, 2025 , the total number of shares of
common stock available for grant under the amended and restated Equity Incentive Plan was 23.4 million and, following the
grant of awards in February 2026, the total number of shares of common stock available for grant under the amended and
restated Equity Incentive Plan was 17.6 million . A further increase in the number of shares available for grant under the Equity
Incentive Plan wou ld 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,
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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.
Certain of our co-founders have the right to designate members of our Board of Directors.
Pursuant to the stockholder agreements with certain of our co-founders, for so long as such co-founder and/or his
“Stockholder Group” (as defined in the stockholder agreements) beneficially owns at least 5% of our issued and outstanding
common stock, such co-founders will have the right to nominate one director to our Board of Directors. In addition, such 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 Stockholder 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 our former general partner, co-founders,
directors, officers, or 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.
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Anti-takeover provisions in our organizational documents could delay or prevent a change in control.
Certain provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay, or prevent
a merger or acquisition that a stockholder may consider favorable by, for example:
• permitting our Board of Directors to issue one or more series of preferred stock;
• providing for the loss of voting rights for the common stock;
• requiring advance notice for stockholder proposals and nominations;
• placing limitations on convening stockholder meetings;
• prohibiting stockholder action by written consent unless such action is consented to by the Board of Directors;and
• imposing super majority voting requirements for certain amendments to our amended and restated certificate of
incorporation.
These provisions also may discourage acquisition proposals or delay or prevent a change in control.
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 certain 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
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
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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 number of funds we are required to consolidate has been increasing as a result
of the impacts of capital from our balance sheet invested in new products and our indirect interest in funds through our
investment in Fortitude. Generally, the consolidation of our investment 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 beyond the capital contributed by us to the
consolidated investment funds . The majority of the net economic ownership interests of these consolidated investment funds are
reflected as non-controlling interests in consolidated entities in the consolidated financial statements.
However, in certain of the consolidated investment funds, particularly those where we have elected to invest additional
amounts or bridge investments in new investment areas, the non-controlling interests are less significant. Additionally, the
consolidated investment funds are not the same entities in all periods presented. As a result, t he consolidation of such entities
could make it difficult for an investor to understand our operating performance. In addition, as the number of funds we
consolidate increases, our reporting processes may become more complex, which may lead to higher costs and introduce
operational risk.
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, uncertain tax
positions, 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 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 that we, our portfolio companies, our investors, or our employees and other key personnel are required to pay. This could
significantly impact returns by materially and adversely affecting the value of our investments or the feasibility of making
certain investments, require us to negatively revalue our deferred taxes, and/or materially increase our effective tax rate and tax
liabilities. 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 change to, European Union (“EU”) directives may
adversely affect our ability to efficiently realize and repatriate income and capital gains from the jurisdictions in which they
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arise. These changes to tax laws , taxation treaties, and interpretations may require complex computations not previously
required, significant judgments, and/or preparation of information not previously relevant or regularly produced, which may
increase tax-related regulatory and compliance costs. For example, the Inflation Reduction Act of 2022 (the “IRA”) introduced,
among other things, a 15% alternative minimum tax on the “adjusted financial statement income” of certain large corporations,
which has required judgments in interpretation and complex computations and analysis to be performed that were not
previously required in U.S. tax law.
In addition, the One Big Beautiful Bill Act (the “OBBBA”) was enacted on July 4, 2025, and made permanent many
provisions from the Tax Cuts and Jobs Act of 2017 and amended or eliminated certain provisions from the IRA. Treasury, the
Internal Revenue Service, and other standard-setting bodies are expected to issue additional guidance relating to
implementation of OBBBA , which may be applied or otherwise administered differently from our interpretations. It is unclear
whether additional legislation will be enacted into law under the current administration or, if enacted, what form it would take,
and it is also unclear whether there could be further regulatory or administrative action that could affect U.S. tax rules.
State and local governments also may enact tax laws that fundamentally change state and local taxation, increase audit
activity, or prompt more aggressive interpretations of existing laws and regulations. Any of these risks may have a material
adverse effect on our results of operations, financial condition, and cash flow.
Our workforce, including employees, key personnel, and service providers, has become increasingly geographically
dispersed. This geographic dispersion may subject our entities to higher tax and compliance costs, including increased payroll
taxes, social security contributions, and other employment-related obligations. It may also cause our entities to become subject
to taxation in additional jurisdictions where they were not previously considered to have a taxable presence. If these incremental
tax or compliance costs are passed on to employees or other personnel, or if we are required to implement more restrictive
working arrangements to manage associated risks, our ability to attract, develop, and retain talent could be adversely affected.
In addition, failure to properly manage these obligations could expose us to penalties, additional assessments, or other
regulatory consequences.
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
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”). In a report from the General Secretariat of the Council of the European Union dated June 18, 2025, it was noted that the
original aims of the proposal for a council directive laying down rules to prevent the misuse of shell entities for tax purposes
within the EU could be achieved through clarifications or amendments to existing hallmarks under DAC 6. Whether such
clarifications or amendments to existing hallmarks under DAC 6 will be made, and if so, the details and timing of the
implementation of such clarifications or amendments and their impact on our entities and the performance of certain funds
remains uncertain.
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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 approved by the European Parliament on November
13, 2025,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). 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 proposal is intended to come into force on July 1, 2028. 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 at simplifying the procedures for a refund or applying for
relief at the source; however, the changes could have broader implications. These withholding tax changes, once implemented
into domestic legislation, 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. 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. On January 5, 2026, the OECD
announced a “side-by-side” system under which U.S.-parented groups would be able to elect to be effectively exempt from
certain of the Pillar Two rules, together with certain simplifications to the existing rules. The details of such amendments and
the “side-by-side” system remain the subject of further discussions and clarifications from the OECD, and the implementation
of such system by the OECD member countries remains uncertain. Pillar One and Pillar Two could impact the effective tax
rates 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 deferred taxes 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.
