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Print Email PDF WORD XLS XBRL. The Carlyle Group L. Exact name of registrant as specified in its charter. State or other jurisdiction of. Address of principal executive offices. Title of each class. Name of each exchange on which registered. Common units representing limited partner interests. The NASDAQ Global Select Market. Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule of the Securities Act. Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Act. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings.

We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. References in this report to the ownership of the senior Carlyle professionals and other employees include the ownership of personal planning vehicles of these individuals. Our Fee-earning AUM generally equals the sum of: Our AUM equals the sum of the following: We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone Holdings L.

For our carry funds, co-investment vehicles, fund of funds vehicles, and NGP management fee funds, total AUM includes the fair value of the capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original investment period for the fund has expired.

As such, Fee-earning AUM may be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments. Our calculations of AUM and Fee-earning AUM may differ from the calculations of other alternative asset managers.

As a result, these measures may not be comparable to similar measures presented by other alternative 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 or performance fees.

Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.

We advise an array of specialized investment funds and other investment vehicles that invest across a range of industries, geographies, asset classes and investment strategies and seek to deliver attractive returns for our fund investors. Since our firm was founded in Washington, D.

We have more than 1, employees, including more than investment professionals in 36 offices across six continents, and we serve more than 1, active carry fund investors from 78 countries. In general, we have more investment professionals, offices, investment funds, and investments across our platform than many of our peers. We have structured our firm in this manner to provide our fund investors with a more diverse product set tailored to individual investing decisions, and a broader global reach, but such structure increases our costs of doing business.

The growth and development of our firm has been guided by several fundamental tenets: Our primary goal is to invest wisely and create value for our fund investors. We strive to generate superior investment returns by combining deep industry expertise, a global network of local investment teams who can leverage extensive firm-wide resources and a consistent and disciplined investment process.

Commitment to our Fund Investors. Our fund investors come first. This commitment is a core component of our firm culture and informs every aspect of our business. We believe this philosophy is in the long-term best interests of Carlyle and its owners, including our common unitholders. Investment in the Firm. We have invested, and intend to continue to invest, significant resources in hiring and retaining a deep talent pool of investment professionals and in building the infrastructure of the firm, including our expansive local office network and our comprehensive investor services team, which provides finance, legal and compliance and tax services in addition to other services.

Expansion of our Platform. We innovate continuously to expand our investment capabilities through the creation or acquisition of new asset- sector- and regional-focused strategies in order to provide our fund investors a variety of investment options. We believe our collaborative approach enhances our ability to analyze investments, deploy capital and improve the performance of our portfolio companies.

There are four primary drivers of our business — fundraising or attracting new capital commitments to our funds; investing; working to create value for our investors or to achieve appreciation of our various investments; and harvesting, selling or otherwise disposing of our carry fund investments. Operational and strategic highlights for include the following: We continued to bolster our senior management team by hiring a new Chief Information Officer and promoting the co-head of our U.

Each of our segments continued to leverage the One Carlyle platform to take advantage of economies of scale and offer our fund investors differentiated products. In our CPE segment: We closed our fourth Europe buyout fund, our third Japan buyout fund and our third European technology fund.

We launched fundraising for our fifth Asia growth fund and continued to see investor demand for our second U. We invested in, among others, Asia Satellite Telecom Holdings through CAP IVThe Innovation Group through CEP IVJIC Leasing Co. We sold our stake in, among others, Altice S. We also undertook several successful initial public offerings including Tsubaki Nakashima Co. CSP III and CEMOF I were particularly active this year, investing in Nationwide Accident Repair Services CSP IIITrey Resources CEMOF Iand Clearly Petroleum Holdings CEMOF Iamong others.

We established a partnership with Hilcorp Energy Company that will seek to acquire, operate, and develop onshore oil and natural gas properties and related assets in North America. In our Real Assets segment: We closed our seventh U. Demand for our second power fund remained strong, and we launched fundraising for a new core-plus real estate fund.

Building on our existing expertise in real estate and infrastructure, we intend to launch a global infrastructure fund later this year. We invested in power generating facilities in the United States, an office property in China and a Romanian oil and gas development platform.

We exited a number of investments, including a student housing portfolio in the United Kingdom, a Florida based MW coal-fired power facility, a southern California apartment complex and a Northern Virginia mid-rise apartment complex. In our Investment Solutions segment: We named a new Head of Investment Solutions, promoting the segment's Chief Operating Officer and Chief Financial Officer to the position.

We operate our business across four segments: Although we primarily transact business in the United States and a significant amount of our revenues are generated domestically, we have established investment vehicles whose primary focus is making investments in specified geographical locations. Our Corporate Private Equity segment, established in with our first U.

Our 32 active CPE funds are each carry funds. They are organized and operated by geography or industry and are advised by separate teams of local professionals who live and work in the markets where they invest.

In our CPE segment we also have 56 active external co-investment entities. We believe this diversity of funds and entities allows us to deploy more targeted and specialized investment expertise and strategies and offers our fund investors the ability to tailor their investment choices.

Our CPE teams have two primary areas of focus: Our buyout teams advise a diverse group of 22 active funds that invest in transactions that focus either on a particular geography e. We continually seek to expand and diversify our buyout portfolio into new areas where we see opportunity for future growth. Inwe had final closings on our fourth European buyout fund and third Japan buyout fund and continued fundraising for our first longer duration global buyout fund.

Our 10 active growth capital funds are advised by four regionally focused teams in the United States, Europe and Asia, with each team generally focused on middle-market and growth companies consistent with specific regional investment considerations. The investment mandate for our growth capital funds is to seek out companies with the potential for growth, strategic redirection and operational improvements.

These funds typically do not invest in early stage or venture-type investments. Inlaunched our fifth Asia growth fund, held a final closing for our third Europe technology fund at its cap and continued fundraising for our second U. We have fully realized of these investments, meaning that our funds have completely exited, and no longer own an interest in, those investments.

This decrease was primarily due to redemptions in our hedge funds, offset by eight new issue CLOs, fundraising for our second generation energy mezzanine fund, our second securitized commodity structured transactions vehicle and fundraising for our first carry fund dedicated to Asian structured credit. Primary areas of focus for our GMS teams include: Our structured credit funds invest primarily in performing senior secured bank loans through structured vehicles and other investment vehicles.

Inwe closed five new U. Distressed and Corporate Opportunities. Our distressed and corporate opportunities funds generally invest in liquid and illiquid securities and obligations, including secured debt, senior and subordinated unsecured debt, convertible debt obligations, preferred stock and public and private equity of financially distressed companies in defensive and asset-rich industries. In certain investments, our funds may seek to restructure pre-reorganization debt claims into controlling positions in the equity of reorganized companies.

Our energy mezzanine opportunities team invests primarily in privately negotiated mezzanine debt investments in North American energy and power projects and companies. Emerging Market Equity and Macroeconomic Strategies. CCM seeks to produce positive, uncorrelated returns, through a liquid, relative-value, low volatility approach to trading both physical commodities and their derivatives and structuring transactions in physical commodities.

Includes 67 middle-office and back office professionals. Our Real Assets segment, established in with our first U. This segment pursues investment opportunities across a diverse array of tangible assets, such as office buildings, hotels, retail and residential properties, industrial properties and senior-living facilities, as well as oil and gas exploration and production, midstream, refining and marketing, power generation, pipelines, wind farms, refineries, airports, toll roads, transportation, water utility and agriculture, as well as the companies providing services or otherwise related to them.

Our Real Assets teams have two primary areas of focus: Our eight active real estate funds pursue real estate investment opportunities in Asia, Europe and the United States and generally focus on acquiring single-property assets rather than large-cap companies with real estate portfolios. Energy and Natural Resources. Our energy and natural resources activities focus on buyouts, growth capital investments and strategic joint ventures in the midstream, upstream, power and oilfield services sectors, the renewable and alternative sectors and the energy and power industries around the world.

Currently, we conduct our North American energy investing through our partnership with NGP Energy Capital Management, an Irving, Texas-based energy investor. Our power team focuses on investment opportunities in the North American power generation sector. Our international energy investment team focuses on investments in a full range of energy assets outside of North America.

We also have an infrastructure team that focuses on investments in infrastructure companies and assets. Excludes NGP and Riverstone employees.

Excludes investment activity of the NGP management fee funds. Includes the six NGP management fee funds and three carry funds advised by NGP. Our Investment Solutions segment provides comprehensive investment opportunities and resources for our investors and clients to build private equity and real estate portfolios through fund of funds, secondary purchases of existing portfolios and managed coinvestment programs. In Februarywe decided to restructure our Investment Solutions segment to focus on private market secondaries, co-investment and managed account activities and, given the challenging market environment, discontinue our fund of hedge funds and liquid alternative initiatives.

In connection with the restructuring, we commenced a wind down of the operations of DGAM, a global manager of hedge funds based in Toronto, Canada that we acquired in February We expect that this action will improve our Investment Solutions results in the future, exclusive of costs incurred in connection with the wind down. The primary areas of focus for our Investment Solutions teams include: Private Equity Fund Investments. Private Equity Secondary Investments.

We manage through AlpInvest funds that acquire limited partnership interests in secondary market transactions. 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. Inwe established a secondary team dedicated to finding opportunities in the energy and infrastructure space.

Real Estate, Funds of Funds and Co-Secondary Investments. We also focus on real estate secondaries and coinvestments. The investment approach of our Corporate Private Equity 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 CPE funds are initially sourced and evaluated by one or more of our deal teams. In evaluating each deal, we consider what expertise or experience i. An investment opportunity must secure final approval from the investment committee of the applicable investment fund.

The investment committee approval process involves a detailed overview of the transaction and investment thesis, business, risk factors and diligence issues, as well as financial models. We have developed a global network of local investment teams with deep local insight into the areas in which they invest 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 allow them to identify and take advantage of opportunities which may be unavailable to firms who do not have our global reach and resources.

We also have particular industry expertise in aerospace, defense and government services, consumer and retail, financial services, healthcare, industrial, telecom, media and technology and transportation. 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 such industries to identify potential buyers as part of a coherent exit strategy.

Variable Deal Sizes and Creative Structures. Our teams are staffed not only to effectively pursue large transactions, but also other transactions of varying sizes. We often invest in smaller companies 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. Our CPE teams seek to make investments in portfolio companies in which our particular strengths and resources may be employed to their best advantage.

Typically, as part of a CPE investment, our investment teams will prepare and execute a 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: Our global team and global presence that enables us to support international expansion efforts and global supply chain initiatives.

Our investment professionals and our industry specialists, who provide extensive sector-specific knowledge and local market expertise. We engage 26 operating executives and advisors as independent consultants to work with our investment teams during due diligence, provide board-level governance and support and advise our portfolio company CEOs. We use this collective group of advisors to provide special expertise to support specific value creation initiatives.

The goal of our research function is to extract as much information from the portfolio as possible about the current state of the economy and its likely evolution over the near-to-medium term. By evaluating these 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.

Pursuing Best Exit Alternatives. In determining when to exit an investment, our private equity teams consider whether a portfolio company has achieved its objectives, the financial returns and the appropriate timing in industry cycles and company development to strive for the optimal value. The investment approach of our Global Market Strategies credit-focused funds is generally characterized as follows: Our GMS teams source 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 its customer base.

Conduct Fundamental Due Diligence and Perform Capital Structure Analyses. After an opportunity is identified, our GMS teams conduct fundamental due diligence to determine the relative value of the potential investment and capital structure analyses to determine the 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.

Evaluation of Macroeconomic Factors. They work to structure investments with strong financial covenants, frequent reporting requirements and board representation, if possible. Through board representation or observation rights, our GMS teams work to provide a consultative, interactive approach to equity sponsors and management partners as part of the overall portfolio management process.

Our Real Assets business includes investments in real estate assets, infrastructure and energy and natural resources including power companies and projects.

The investment approach of the teams advising the international energy, power and infrastructure funds is similar to that of our CPE funds. Generally, the investment approach of our real estate teams is characterized as follows: Pursue Single Asset Transactions. In general, our U. We follow this approach in the U. In addition, direct ownership of assets typically enables us to effectively employ an active asset management approach and reduce financing and operating risk, while increasing the visibility of factors that affect the overall returns of the investment.

Historically, we have used an opportunistic real estate investment strategy; however, we have recently expanded our platform to include a core-plus investment strategy. Currently, we are pursuing a value add strategy in China and focusing on opportunities such as logistics and data center platforms.

In Europe, we pursue investment opportunities across asset classes and geographies both for single assets and portfolios, with a focus on opportunistic or value-add strategies. Seek out Strong Joint Venture Partners or Managers. Where appropriate, we seek out joint venture partners or managers with significant operational expertise.

We also typically structure positions with control or veto rights over major decisions. Such relationships have resulted in our ability to source a large number of investments on a direct negotiated basis.

Focus on Sector-Specific Strategies. Our real estate funds focus on specific sectors and markets in areas where we believe the fundamentals are sound and dynamic capital markets allow for identification of assets whose value is not fully recognized. The real estate funds we advise have invested according to strategies established in several main sectors: Actively Manage our Real Estate Investments.

Our real estate investments often require active management to uncover and create value. Accordingly, we have put in place experienced local asset management teams. These teams add value through analysis and execution of capital expenditure programs, development projects, lease negotiations, operating cost reduction programs and asset dispositions. The asset management teams work closely with the other real estate professionals to effectively formulate and implement strategic management plans.

Manage the Exit of Investments. In determining when to exit an investment, our real estate teams consider whether an investment has fulfilled its strategic plan, the depth of the market and generally prevailing industry conditions.

Our energy and natural resources activities primarily focus on three areas: Our international energy team pursues investment opportunities in oil and gas exploration and production, midstream, oilfield services and refining and marketing in Europe, Africa, Latin America and Asia.

Seeking to take advantage of the lack of capital in the international energy market, we pursue transactions where we have a distinctive competitive advantage and can create tangible value for companies in which we invest, through industry specialization, deployment of human capital and access to our global network.

In seeking to build a geographically diverse international energy portfolio, we focus on cash generating opportunities, with a particular focus on proven reserves and production, and strategically seek to enhance the efficiency of the portfolio through exploration or infrastructure improvements.

North American Energy Investing. We conduct our current North American energy investing through our partnership with NGP Energy Capital Management, an Irving, Texas-based energy investment firm that focuses on investments across a range of energy and natural resource assets, including oil and gas resources, oilfield services, pipelines and processing, as well as agricultural investments and properties.

NGP strives to establish a portfolio of platform companies to grow through acquisitions and development and provides financial and strategic support and access to additional capital at the lowest cost.

We do not control or manage the NGP management fee funds or the existing carry funds that are advised by NGP. NGP is managed by its founders and other senior members of NGP. Leveraging the expertise of the investment professionals at Cogentrix Energy L. We seek to capitalize on secular trends and to identify assets where engineering and technical expertise, in addition to a strong management team, can facilitate performance.

Our Investment Solutions team aims to apply a wide array of capabilities to help clients meet their investment objectives. The investment approach of our Investment Solutions platform is generally characterized as follows: Depth of Investment Expertise. Investment Solutions has dedicated teams for each area of focus, and seeks to attract and retain talent with the required skill-set for each strategy.

Investment Solutions professionals have trading, operational, portfolio and risk management expertise. From a top-down perspective, investment professionals seek to position the Investment Solutions business to capitalize on market opportunities through focused research and allocation of resources.

Investment Solutions professionals focus on diversification, risk management and downside protection. Its processes include the analysis and interpretation of macrodevelopments in the global economy and the assessment of a wide variety of issues that can influence the emphasis placed on sectors, geographies, asset classes and strategies when constructing investment portfolios.

After making an investment commitment, the investment portfolios are subject to at least semi-annual reviews conducted by the respective investment team responsible for each investment. Investment Solutions professionals seek to leverage the intellectual capital throughout the firm to identify emerging trends, market anomalies and new investment technologies to facilitate the formation of new strategies, as well as to set the direction for exiting strategies.

This market intelligence provides them with an additional feedback channel for the development of new investment products. Our Family of Funds. We present total capital commitments as opposed to assets under management for our closed-end investment funds because we believe this metric provides the most useful information regarding the relative size and scale of such funds. In the case of our hedge funds, fund of hedge funds vehicles, and other structured products which are open-ended and accordingly do not have permanent committed capital, we believe the most useful metric regarding relative size and scale is assets under management.

Real Estate Carry Funds. Carlyle Realty Partners U. Global Financial Services Partners. Global Market Strategies Carry Funds. Carlyle Europe Real Estate Partners. Carlyle Asia Real Estate Partners.

International Energy Carry Fund. Carlyle Asia Structured Credit Opportunities. NGP Energy Carry Funds. Hedge Funds and Other Vehicles 1. NGP Agribusiness Carry Fund. NGP Management Fee Funds. Carlyle South American Buyout Fund. Legacy Energy Carry Funds. Carlyle Sub-Saharan Africa Fund. Cross Border Equity Master Fund. Domestic Opportunity Master Fund. Emerging Sovereign Group - Various. Carlyle Commodity Management - Various 4. Business Development Companies 2. Carlyle GMS Finance, Inc.

Fund of Private Equity Funds. Carlyle Europe Technology Partners. Real Estate Fund of Funds. Diversified Global Asset Management 1. Fund of Hedge Funds. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change. Open-ended hedge funds and other pooled vehicles. As disclosed in Note 3 to the consolidated financial statements, the Partnership commenced a wind down of the operations of Diversified Global Asset Management in the first quarter of Carlyle Commodity Management was formerly known as Vermillion Asset Management.

The simplified diagram below depicts our organizational structure. The diagram does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held. As discussed in greater detail below, The Carlyle Group L. While the holders of common units of The Carlyle Group L. Public investors do not directly hold equity interests in the Carlyle Holdings partnerships.

TCG Carlyle Global Partners L. Certain individuals engaged in our business own interests directly in selected subsidiaries, including, in certain instances, entities that receive management fees from funds that we advise.

Each of the Carlyle Holdings partnerships was formed to hold our interests in different businesses. Carlyle Holdings I L. Carlyle Holdings II L. Certain of our non-U. Carlyle Holdings I GP Inc. We refer to Carlyle Holdings I GP Inc. An entity that is treated as a partnership for U.

Instead, each partner is required to take into account its allocable share of items of income, gain, loss and deduction of the partnership in computing its U. Each holder of our common units is a limited partner of The Carlyle Group L. We believe that the Carlyle Holdings partnerships should also be treated as partnerships and not as corporations for U.

Accordingly, the holders of partnership units in Carlyle Holdings, including The Carlyle Group L. The Carlyle Holdings partnership units that are held by The Carlyle Group L.

Accordingly, the income of Carlyle Holdings benefits The Carlyle Group L. Our general partner does not have any business activities other than managing and operating us. We reimburse our general partner and its affiliates for all costs incurred in managing and operating us, and our partnership agreement provides that our general partner determines the expenses that are allocable to us.

Although there are no ceilings on the expenses for which we will reimburse our general partner and its affiliates, the expenses to which they may be entitled to reimbursement from us, such as director fees, historically have not been, and are not expected to be, material. Our diverse and sophisticated investor base includes more than 1, active carry fund investors located in 78 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 strive to maintain a systematic fundraising approach to support growth and serve our investor needs. We work for our fund investors and continuously seek to strengthen and expand our relationships with them through frequent investor engagement and by cross-selling products across our diverse platform.

We have a dedicated in-house LP relations group, which includes 27 geographically focused professionals with extensive investor relations and fundraising experience. In addition, we have 18 product specialists with a focus on specific business segments and 10 professionals focused on high net worth distribution. Our LP relations group is supported by 66 support staff responsible for project management and fulfillment. Our LP relations professionals are in constant dialogue with our fund investors, which enables us to monitor client preferences and tailor future fund offerings to meet investor demand.

We strive to secure a first-mover advantage with key investors, often by establishing a local presence and providing a broad and diverse range of investment opportunities. We believe the loyalty of our 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. We have a team of over investor services professionals worldwide.

The investor services group performs a range of functions to support our investment teams, LP relations group, and the corporate infrastructure of Carlyle. Our investor services professionals provide an important control function, ensuring that transactions are structured pursuant to the 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.

We intend to continue to build and invest in our legal, regulatory and compliance functions to enable our investment teams to better serve our investors.

Structure and Operation of Our Investment Funds. 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 simple majority vote, as discussed below.

In the case of certain separately managed accounts advised by us, the investor, rather than us, may control the asset or the investment decisions related thereto or certain investment vehicles or entities that hold or have custody of such assets. Each investment fund and in the case of our separately managed accounts, the client, engages an investment adviser. Carlyle Investment Management L. Our investment advisers are generally entitled to a management fee from each investment fund for which they serve as investment advisers.

Our carry funds, fund of funds vehicles, business development companies, and NGP management fee funds are closed-ended funds. In a closed-ended fund structure, once an investor makes an investment, the investor is generally not able to withdraw or redeem its interest, except in very limited circumstances.

In the open-ended funds we advise, investors are usually locked-up for a period of time after which they may generally redeem their interests on a quarterly basis. With respect to our carry funds, investors generally agree to fund their commitment over a period of time. Following the termination of the commitment period, an investor generally will be released from any further obligation with respect to its undrawn capital commitment except to the extent necessary to pay partnership expenses and management fees, fund outstanding borrowings and guarantees, complete investments with respect to transactions committed to prior to the end of the commitment period and make follow-on investments in existing companies.

Investors in the latest generation of our real estate funds generally commit to fund their investment for a period of four Asia and Europe or five United States years from the final closing date, provided that the general partner may unilaterally extend such expiration date for one year and may extend it for another year with the consent of a majority of the limited partners or the investment advisory committee for that fund. Investors in the latest generation of our real estate funds are also obligated to continue to make capital contributions with respect to follow-on investments and to repay indebtedness for a period of time after the original expiration date of the commitment period, as well as to fund partnership expenses and management fees during the life of the fund.

The term of each of the CPE, Real Assets and GMS carry funds generally will end 10 years from the initial closing date, or in some cases, from the final closing date, but such termination date may be earlier in certain limited circumstances or later if extended by the general partner in many instances with the consent of a majority in interest based on capital commitments of the investors or the investment advisory committee for successive one-year periods, typically up to a maximum of two years.

With respect to our fund of funds vehicles, the commitment period generally runs for a period of three years after the initial closing date of the vehicle. Following the termination of the commitment period, an investor in one of our fund of funds vehicles generally will only be required to fund additional amounts for partnership expenses, fund outstanding borrowings and guarantees, transactions in process or committed to during the investment period and make follow-on investments in existing companies.

The term of each of the fund of funds vehicles generally will end 8 to 12 years from the initial closing date. In some cases, the termination date may be later if extended by the general partner in many instances with the consent of a majority in interest based on capital commitments of the investors or the investment advisory committee for successive up to.

Following the expiration or termination of the investment period of such carry funds, the management fees generally step-down to between 0. The management fees that we receive from our carry funds typically are payable semi-annually in advance. The investment adviser of our private equity and real estate fund of funds vehicles generally receives an annual management fee that ranges from 0.

Following the expiration of the commitment fee period or weighted-average investment period of such fund of funds vehicles, the management fees generally range from 0. The management fees for our fund of hedge funds vehicles generally range from 0.

The management fees we receive from our fund of funds vehicles typically are payable quarterly in advance. The investment adviser of our hedge funds generally receives management fees that range from 1. The investment adviser of our business development companies generally receives management fees quarterly in arrears at annual rates that range from 0. The investment adviser of each of our CLOs and other structured products generally receives an annual management fee of 0.

Such management fees are due quarterly or semi-annually based on the terms of the applicable fund documentation and recognized over the respective period. The investment adviser will receive management fees for the CLOs until redemption of the securities issued by the CLOs, which is generally five to ten years after issuance. Open-ended funds typically do not have stated termination dates.

The management fees received by our Claren Road, ESG and CCM hedge funds have similar characteristics. Our equity interest in NGP previously entitled us to an allocation of income equal to The ongoing monitoring fees that they receive are generally calculated as a percentage of a specified financial metric of a particular portfolio company.

The general partner of each of our carry funds and fund of funds vehicles also receives carried interest from the carry fund or fund of funds vehicle. Carried interest entitles the general partner to a special residual allocation of profit on third-party capital.

Net realized profit or loss is not netted between or among funds. If, as a result of diminished performance of later investments in the life of a carry fund or fund of funds vehicle, the carry fund or fund of funds vehicle does not achieve investment returns that in most cases.

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 is ultimately realized and distributed when: Distributions to eligible senior Carlyle professionals in respect of such carried interest are generally made shortly thereafter. Our decision to realize carry considers such factors as the level of embedded valuation gains, the portion of the fund invested, the portion of the fund returned to limited partner investors, and the length of time the fund has been in carry, as well as other qualitative measures.

In addition to the carried interest from our carry funds, we are also entitled to receive incentive fees or allocations from certain of our GMS funds. These incentive fees are a component of performance fees in our consolidated financial statements and are treated as accrued until paid to us. With respect to our arrangements with NGP, we have acquired future interests in the general partners of certain future funds advised by NGP that will entitle us to an allocation of income equal to DGAM investment funds generally pay annual incentive fees equal to 7.

In Februarywe decided to restructure our Investment Solutions segment to focus on private market secondaries, co-investment and managed. In connection with the restructuring, we commenced a wind down of the operations of DGAM. As noted above, in connection with raising new funds or securing additional investments in existing funds, we negotiate terms for such funds and investments with existing and potential investors.

The outcome of such negotiations could result in our agreement to terms that are materially less favorable to us than for prior funds we have advised or funds advised by our competitors. Risk Factors — Risks Related to Our Business Operations — Our investors in future funds may negotiate to pay us lower management fees and the economic terms of our future funds may be less favorable to us than those of our existing funds, which could adversely affect our revenues.

Capital Invested in and Alongside Our Investment Funds. To further align our interests with those of investors in our investment funds, we have invested our own capital and that of our senior Carlyle professionals in and alongside the investment funds we sponsor and advise.

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We also intend to make investments in our open-end funds 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.

Our general partner capital commitments are funded with cash and not with carried interest or through a management fee waiver program. We are committed to the principle that building a better business means investing responsibly. In SeptemberCarlyle developed a set of responsible investment guidelines that consider the environmental, social and governance implications of certain investments we make. These guidelines were integral to shaping the corporate social responsibility guidelines later adopted by the members of the Private Equity Growth Capital Council.

We have worked to integrate these guidelines into our investment decision-making process for controlling, corporate investments. We also have worked to develop internal expertise in our sustainability work. We are a member of Business for Social Responsibility, a global nonprofit business network dedicated to sustainability. We also educate portfolio companies in which we have a controlling interest on the guidelines and encourage them to review the guidelines at the board level on an annual basis.

We are a member of the British Venture Capital Association and seek to ensure that our U. We believe that we are compliant with the BVK Guidelines for Disclosure and Transparency and seek to ensure that our German portfolio companies comply with these guidelines when they are required to do so. AlpInvest is a signatory of the UN-backed Principles for Responsible Investment and has adopted the UN Global Compact as a corporate social responsibility CSR framework to evaluate fund managers and portfolio companies.

AlpInvest has fully integrated CSR into its investment process and actively engages with fund managers and other stakeholders in the private equity markets to promote sustainability and improved corporate governance as an investment consideration.

In addition, AlpInvest seeks opportunities to invest in sustainability solutions. Global Information Technology and Solutions. Global Information Technology and Solutions, which we refer to as GTS, is essential for Carlyle to conduct investment activities, manage internal administration activities and connect a global enterprise.

As part of our GTS strategy and governance processes, we develop and routinely refine our technology architecture to leverage solutions that will best serve the needs of our investors. Our systems, data, network and infrastructure are continuously monitored and administered by formal. Our business continuity plan is designed to allow all critical business functions to continue in an orderly manner in the event of an emergency.

As a global alternative asset manager, we compete with a broad array of regional and global organizations for both 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 and the relative attractiveness of the particular opportunity in which a particular fund intends to invest.

To stay competitive, we believe it is also important to be able to offer fund investors a customized suite of investment products which enable them to tailor their investments across alternatives in hedge funds, private equity and real estate.

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.

Within our CPE segment, we also compete with business development companies and operating companies acting as strategic acquirers.

In our GMS segment, we compete with private credit strategies, hedge funds, business development companies, distressed debt funds, mezzanine funds and other CLO issuers. In our Real Assets segment, we also compete with real estate development companies. In addition to these traditional competitors within the global alternative asset management industry, we have increasingly faced competition from local and regional firms, financial institutions, 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. In addition, large institutional investors and sovereign wealth funds have begun to develop their own in-house investment capabilities and may compete against us for investment opportunities. As we continue to target high net worth investors, we also face competition from mutual funds and alternative asset management firms that have launched liquid alternative products.

Some of the entities that we compete with as an alternative asset manager are substantially larger and have greater financial, technical, marketing and other resources and more personnel than we do.

Several 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 may also 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 these 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 may also 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.

We believe that one of the strengths and principal reasons for our success is the quality and dedication of our people. Regulatory and Compliance Matters. Our businesses, as well as the financial services industry generally, are subject to extensive regulation in the United States and elsewhere. Certain of our subsidiaries are registered as investment advisers with the SEC.

Registered investment advisers are subject to the requirements and regulations of the Investment 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 staff of the SEC. Our registered investment advisers also have not been subject to any regulatory or disciplinary actions by the SEC. In the first half ofTCG Securities intends to submit an application to FINRA to expand its scope of associated persons. Our broker dealer is subject to routine periodic and other examinations by the staff of FINRA.

No material changes to our broker dealer's operations have been made as a result of such examinations. 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.

To date, TCG Securities has not had any capital adequacy issues and is currently capitalized in excess of the minimum maintenance amount required by regulators. Inwe launched two business development companies which entities are subject to all relevant provisions under the Act as registered investment companies.

Inwe formed a wholly-owned subsidiary of one of the business development companies, which operates as a collateralized loan obligation issuer. Inthe CFTC rescinded an exemption from CFTC registration traditionally relied upon by private fund managers, narrowed an exception related to registered investment companies and amended related rules and guidance.

Consequently, certain CFTC rules expose alternative asset managers, such as us, to increased registration and reporting requirements in connection with transactions in futures, swaps and other derivatives regulated by the CFTC. In addition, certain Carlyle personnel are registered with the CFTC as Principals of certain of these entities. These regulations have required us to reassess certain business practices related to our pooled vehicles, consider registration of additional entities with the CFTC or file for additional exemptions from such registration requirements.

In addition, as a result of their commodities interest-related activities, certain of our entities also may be subject to a wide range of other regulatory requirements, such as: Among other things, FATCA could subject investors within certain Carlyle funds to additional tax withholding.

United Kingdom and the European Union. CECP has permission to engage in a number of corporate finance activities regulated under the FSMA, including 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 is only permitted to carry out these activities in relation to eligible counterparties and professional clients.

The FSMA and related rules govern most aspects of investment businesses, including sales, research and trading practices, provision of investment advice, corporate finance, use and safekeeping of client funds and securities, record keeping, margin practices and procedures, approval standards for individuals, anti-money laundering, periodic reporting and settlement procedures.

The FSMA says that any firm or individual which carries out a regulated activity in the United Kingdom must be authorized or regulated by the FCA, unless they are exempt. Similar to the United States, jurisdictions outside the United States in which we operate, in particular Europe, have become subject to extensive further regulation.

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. The AIFMD imposes significant regulatory requirements on alternative investment fund managers operating or marketing funds to investors within the EEA, as well as prescribing certain conditions with regard to regulatory standards, cooperation and transparency that must be satisfied for non-EEA fund managers to market or manage alternative investment funds into EEA jurisdictions.

Authorization under the AIFMD is currently available only to EEA fund managers. Among other things, EMIR imposes a set of requirements on European Union derivatives activities, including risk mitigation, risk management, regulatory reporting and margin and clearing requirements.

Given the global scale of the derivatives activity of various Carlyle entities, the various regulatory regimes to which Carlyle is subject could result in duplication of administration and increased transaction costs related to such derivatives activities.

As outlined above, certain of our European subsidiaries must comply with the pan-European regime established by MiFID, which regulates the provision of investment services and conduct of investment activities throughout the EEA.

MiFID sets out detailed requirements governing the organization and conduct of business of investment firms and regulated markets. It also includes pre- and post-trade transparency requirements for equity markets and extensive transaction reporting requirements.

When effective, MiFID II will enhance numerous aspects of MiFID and will impose many new compliance requirements on CECP and CELF. Certain of our subsidiaries are subject to registration and compliance with laws and regulations of non-U.

Certain of our private funds are also required to comply with the trading and disclosure rules and regulations of non-U. Like FATCA, CRS will impose certain due diligence, documentation and reporting requirements on various Carlyle entities. While CRS does not contain a potential withholding requirement, non-compliance could subject Carlyle to certain reputational harm.

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 Japan Asset Management YK is registered as an investment adviser with the Japan Financial Services Agency. 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 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 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 how to use the economic calendar for binary options manage collective investment funds.

Carlyle Real Estate SGR S. 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 securities activities in respect of institutional and accredited investors.

Carlyle South Africa Advisors Proprietary Limited, a limited company incorporated in the Republic of South Africa, is licensed as a Category 1 Authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act No. Claren Road Asia Limited is licensed by the Hong Kong Securities and Futures Commission to carry on Type 9 asset management regulated activity in respect of asset management activities to professional investors.

Carlyle GMS Asia Limited is licensed by the Hong Kong Securities and Futures Commission to carry on Type 9 asset management regulated activity in respect of asset management activities to professional investors.

AlpInvest Partners Limited is licensed by the Hong Kong Securities and Futures Commission to carry on Type 1 dealing in securities regulated calendar anomalies in developed eu stock markets in respect of professional investors. DGAM is licensed by the Ontario Securities Commission as an investment fund manager, an adviser in the category of portfolio manager, and as a dealer in the category of exempt market dealer. DGAM is also registered as a commodity trading advisor with the OSC under the Commodity Futures Act in connection with its direct trading business.

Carlyle Commodity Trading Shanghai Co Ltd. CCM ceased its investment activities in Shanghai during the first quarter of but maintains the registration status of CCM Trading Shanghai in anticipation of possible future investment activities in Shanghai. AlpInvest is registered as a cross-border discretionary investment management company with the Financial Supervisory Service of South Korea.

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. 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 impots plus value stock options 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 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, nonpublic information, across our business.

Our enterprise risk management function analyzes our operations earning money using google adsense 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 forex pros usd zar of perceived risk and aims to give management and the board of directors of our general partner reasonable assurance that our risks are well managed and controls are appropriate and effective.

Website and Availability of SEC Filings. Our website address is www. Call the SEC at SEC for further information on the public reference room. In addition, the reports and other documents we file with the SEC are available at a website maintained by the SEC at www. We use our website www. For example, financial and other material information regarding our company is routinely posted on and accessible at www. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts.

The contents of our website and social media channels are not, however, a part of this Annual Report on Form K and are not incorporated by reference herein. Our principal executive offices are located at Pennsylvania Avenue, NW, Washington, D. Risks Related to Our Company. Adverse economic and market conditions 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 is materially affected by conditions in the global financial markets and economic conditions or events throughout the world that are outside of our control, including but not limited to changes in interest rates, availability of credit, inflation rates, economic uncertainty, slowdown in the growth in the Chinese economy, changes in laws including laws relating to taxation and regulations on the financial industrydisease, trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances including wars, terrorist acts or security operations.

In the event of a market downturn, each of our businesses could be affected in different ways. What is plain vanilla currency option believe this volatility is driven by three primary and interrelated factors: At the same time, the decline in Chinese demand for industrial inputs has contributed to a reduction in the capital spending of global businesses operating in the energy, metals, and mining industries because low commodity prices generally do not support new capital investment in businesses in these industries.

Heightened financial market volatility has also been attributed to the ongoing weakness in commodity prices, especially that of crude oil. The International Energy Agency estimates that the global oil market was oversupplied by approximately 2 million barrels per day at the end of For example, mark-to-market losses on commodity-related debt were sufficient to pull overall credit returns into negative territory in and raise financing costs for businesses in unrelated sectors. Losses or anticipated losses on energy and related credits have been so large that financing sources, particularly in the U.

This tightening in the debt financing could impact our ability to finance transactions. Credit spreads on the lowest rated high yield bonds have increased by over bps from the cyclical lows in June Interest rates have been at historically low levels for the last few years, although in Decemberthe U. Federal Reserve increased the target range of the U. Interest rates may rise in future periods, including as a result of further increases in the U.

Further increases in the U. To the extent interest rates rise or there is a reduction in the availability of financing, the value of our portfolio could be adversely impacted. To the extent the uncertainty in the market prompts sellers to readjust their valuations, attractive investment opportunities may present themselves. On the other hand, the reduction in the availability of credit financing, could impact our ability to consummate larger transactions.

Given the tightening of credit markets, it is possible that certain of these transactions will not be consummated on the anticipated terms or at all or that we will be unable to finance new transactions on attractive terms. In the event that our investment pace slows, it could have an adverse impact on our ability to generate future performance fees and fully invest the capital in our funds.

Our funds may also be affected by reduced opportunities to exit and realize value from their investments via a sale or merger upon a general slowdown in corporate mergers and acquisitions activity.

Additionally, we may not be able to find suitable investments for the funds to hotforex credit bonus deploy capital and these factors could adversely affect the timing of and our ability to raise new funds. In addition, negative market conditions would also increase the risk of default with respect to investments held by our funds that have significant make real money with clixsense investments, such as our GMS funds.

Performance in our hedge funds may be impacted by increased market volatility and certain other factors, that could have a negative impact on the level and pace of subscriptions to or redemptions from those businesses. Finally, during periods of difficult market conditions or slowdowns, our fund investment performance could suffer, resulting in, for example, the payment of less or no performance fees to us or the creation of the obligation to repay performance fees previously received by us.

The payment of less or no performance fees could cause a call option has intrinsic value only when the strike price 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 distribute to our unitholders.

The generation of less performance fees could also impact our leverage ratios and compliance with our term loan covenants. Having less cash on hand could in turn require us to rely on other sources of cash such as the capital markets, which may not be available to us on acceptable terms or at all to conduct our operations, which include, for example, funding significant general partner and co-investment commitments to our carry funds and fund of funds vehicles.

Furthermore, during adverse economic and market conditions, we might 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.

Changes in the debt financing markets could negatively impact the ability of certain of our funds and their portfolio companies to obtain attractive financing or re-financing for their investments and could increase the cost of such financing if it is obtained, which could lead to lower-yielding investments and potentially decreasing our net income.

In the event that certain of our funds are unable to obtain committed debt financing for potential acquisitions or can only obtain debt at an increased interest rate or on unfavorable terms, certain of our funds may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than would otherwise be the case, either of which could lead to a decrease in the income earned by us.

For example, in the fourth quarter ofit was widely reported that the banks that committed to finance certain debt related to the acquisition of a large portfolio company by one of our investment funds were unable to syndicate the debt as credit markets weakened and investor demand for financing waned.

Average three-year yields on first-lien loans that support large U. Between June and Januaryspreads on B-rated corporate bonds nearly doubled, from basis points to basis points. These market conditions resulted in our investment funds paying higher interest rates on the debt, though total debt was reduced for the transaction. To the extent that the credit markets render such financing difficult to obtain or more expensive, this may negatively impact the operating performance of those portfolio companies and, therefore, the investment returns of our funds.

In addition, to the extent that the markets make sniper day trading reviews difficult or impossible to refinance debt that is maturing in the near term, some of our 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 use of leverage and earn-out payments may expose us to substantial risks. We use indebtedness as a means to finance our business operations, which exposes us to the risks associated with using leverage. We are dependent on financial institutions such as global banks extending credit to us on reasonable terms to finance our business.

There is no guarantee that such institutions will continue to extend credit to us or will renew the existing credit agreements we have with them, or that we will be able to refinance our outstanding notes when they mature. As borrowings under our credit facility or any other indebtedness mature, we may be required to either refinance them by entering into a new facility, which could result in higher borrowing costs, issuing additional debt or issuing additional equity, which would dilute existing unitholders.

We could also repay them by using cash on hand, cash provided by our continuing operations or cash from the sale of our assets, which could reduce distributions to our unitholders. We could have difficulty entering into new facilities or issuing debt or equity securities in the part time makeup courses lancashire on attractive terms, or at all. From time to time we may access the capital markets by issuing debt securities.

The credit facility contains financial and non-financial covenants with which we need to comply to maintain access to this source of liquidity. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute calendar anomalies in developed eu stock markets 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 revolving credit facility.

In addition, to the extent we incur additional debt or experience a decrease in our level of earnings, our credit rating could be adversely impacted, which would increase our interest expense. In addition, as part of the consideration for several of the new businesses we have acquired, we expect to incur future expenses related to these acquisitions including amortization of acquired intangibles, cash- and equity-based earn-out payments and fair value adjustments on contingent consideration issued.

For example, we have used earn-out payments in several acquisitions to better align the interests of the managers of the acquired businesses with our interests. We have substantial earn-out payments due over the next several years in connection with our strategic investment in NGP and acquisitions of Claren Road, ESG and Metropolitan.

Refer to Note 3, Note 6, and Note 9 to our consolidated financial statements included in this Annual Report on Form K for additional information.

If our acquisitions do not perform as anticipated, we may not be required to fund these earn-out payments. However, to the extent the performance of an acquisition is significantly below plan, it may be an indication that any goodwill or acquired intangible assets from the acquisition is impaired.

An impairment of intangible assets or goodwill would be recognized as an expense on our income statement. Our revenue, earnings and cash flow are variable, which makes it difficult for us to achieve steady earnings growth on a quarterly basis. Our revenue, earnings and cash flow are variable. For example, our cash flow fluctuates because we receive carried interest from our carry funds and certain fund of funds vehicles only when investments are realized and achieve a certain preferred return.

For instance, during the and economic downturn, we recorded significant reductions in the carrying values of many of the investments of the investment funds we advise.

The carrying value of fund investments, particularly the public portion of our carry fund portfolios, may be more put call fx options during times of market volatility. In addition, transaction fees received by our carry funds can vary from quarter-to-quarter and year-to-year depending on our level of investment activity.

This decrease is primarily due to the smaller number of large transactions consummated in as compared to Our hedge fund performance may depend on idiosyncratic factors regarding security selection and other factors that can affect overall investment performance, which can impact our incentive fees and the level and pace of subscriptions and redemptions.

Such variability in the timing and amount of our accruals and realizations of carried interest, performance fees and transaction fees may lead to volatility in the trading price of our common units and cause our results and cash flow for a particular period not to be indicative of our performance in a future period. Because of this volatility, we may not achieve steady growth in net income and cash flow on a quarterly basis, which could in turn lead to adverse movements in the price of our common units or increased volatility in our common unit price generally.

During periods in which a significant portion of our AUM is attributable to carry funds and fund of funds vehicles that are in the fundraising period or their investments are in the investment period that precedes harvesting, as has been the case from time to time, we may receive substantially lower distributions.

Moreover, even if an investment proves to be profitable, it may be several years before any profits can be realized in cash. A downturn in the equity markets also makes it more difficult to exit investments by selling equity securities at a reasonable value.

If we were to have a realization event in a particular quarter, that event may have a significant impact on our quarterly results and cash flow for that short position in put option graph quarter and may not be replicated in subsequent quarters.

We cannot predict precisely when, or if, realizations of investments will occur, where a fund will be in its lifecycle when the realizations occur or whether a fund will realize carried interest. For example, in and as compared toseveral of our portfolio companies engaged in recapitalization transactions, thereby returning capital to the investors in those companies.

None of these transactions, however, produced realized carried interest. We recognize revenue on investments in our investment funds based on our allocable share of realized and unrealized gains or losses reported by such investment funds, and a decline in realized or unrealized gains, or an increase in realized or unrealized how to buy russian stocks, would adversely affect our revenue, which could further increase the volatility of our quarterly results and cash flow.

Because our carry funds and fund of funds vehicles have preferred investor return thresholds that need to be met prior to us receiving any carried interest, declines call forwarding option in lumia 720, or failures to increase sufficiently the carrying value of, the investment portfolios of a carry fund or fund of funds vehicle may delay or eliminate any carried interest distributions paid to us with respect to that fund or vehicle.

This is because the value of the assets in the fund or vehicle would need to recover to their aggregate cost basis plus the preferred return over time before we would be entitled to receive any carried interest from that fund or vehicle.

The timing and receipt of realized carried interest also varies with the life cycle of our carry funds and there is often a difference between the time we start accruing carried interest for financial mturk work from home purposes and the realization and distribution of such carried interest.

In deciding to realize carried interest we consider such factors as the level of embedded valuation gains, the portion of the fund invested, the portion of the fund returned to limited partner investors, the length how ipl earn money time the fund has been in carry, and other qualitative measures.

For example, during the period from late to. In certain circumstances, may also need to reduce the amount of realized carried interest we receive in order to maintain a sufficient level of reserves and reduce the risk of potential future giveback obligations. For financial reporting purposes, we started accruing carried interest in respect of CAP III and CEP III in the how to get unlimited money in just cause 2 xbox 360 quarter ofwhich resulted in a cumulative catch-up of carried interest.

ThroughoutCAP III and CEP III remained in a carry position, but profits were allocated to us in respect of these funds at a more normalized rate i. In order to maintain a sufficient level of reserves and reduce the risk of potential future giveback obligations, we did not realize any carried interest from CEP Automated binary options trade copier software until the second quarter of and from CAP III until the second quarter of With respect to certain of the hedge funds and vehicles that we advise, we are entitled to incentive fees that are paid annually, semi-annually or quarterly if the net asset value of an investor's account has increased.

The incentive fees we earn are dependent on the net asset value of these funds or vehicles, which could lead to volatility in our quarterly results and cash flow. For our hedge funds, in making their decision whether to increase or maintain allocations to our funds, our investors may consider, among other factors, the absolute performance and relative outperformance and lower volatility versus their respective benchmarks.

Several of our how to win in binary options made easy funds are currently below their high water marks. Our fee revenue may also depend on the pace of investment activity in our funds. We may receive a lower management fee from such funds if there has been a decline in value or after the investing period and during the period the fund is harvesting its investments.

As a result, the variable pace at which many of our carry funds invest capital and dispose of investments may cause our management fee revenue to vary from one quarter to the next. Additionally, in certain of our funds that derive management fees only on the basis of invested capital, the pace at which we make investments, the length of time we hold such investment and the timing of dispositions will directly impact our revenues.

The investment period of a fund may expire prior to the raising of a successor fund. Where appropriate, we may work with our limited partners to extend the investment period, which gives us the opportunity to invest any capital that remains in the fund. In general, the end of the original investment period regardless of whether it is extended will trigger a change in the capital base on which management fees are calculated from committed capital to invested capital.

In some cases, a step-down in stock market closed today presidents day applicable rate used to calculate management fees may also occur. How to read stock market indices some of our hedge funds, a reduction in the value of our Fee-earning How to make money with stocker cattle could result in a reduction in the management fees and incentive fees we earn from those funds.

In addition, our failure to successfully replace and grow Fee-earning AUM through the integration of recent acquisitions and anticipated new fundraising initiatives could have an adverse effect on our management fee revenue. We depend on our founders and other key personnel, 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 senior Carlyle professionals, including our founders, Messrs. Our founders have no immediate plans to cease providing services to our firm, but our founders and other key personnel are not obligated to remain employed with us.

As part of our on-going succession planning, and to enhance our capabilities, we have and will continue to hire and internally develop senior professionals to assume key leadership positions throughout the firm into the future.

Accordingly, the efficacy of future leadership may constitute an adverse risk to our business. 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 objectives.

The loss of the services of any of them could have a material adverse effect on our revenues, net income and cash flow and could harm our ability to maintain or grow AUM in existing funds or raise additional funds in the future. Under currency option pricing binomial model excel vba provisions of the partnership agreements governing most of our carry funds, the departure of various key Carlyle personnel could, under certain circumstances, relieve fund investors of their capital commitments to those funds, if such an event is not cured to the satisfaction of the relevant fund investors within a certain amount of time.

However, to the extent our investment funds perform poorly, thereby reducing the potential for carried interest and incentive fees, their interests in carried interest and incentive fees become less valuable to them and may become a less effective retention tool. Our senior Carlyle professionals and other key personnel possess substantial experience and expertise and have strong business relationships with investors in our funds and other members of the business community. As a result, the loss of these personnel could jeopardize our relationships with investors in our funds and members of the business community and result in the reduction of AUM or fewer investment opportunities.

For example, if any of our senior Carlyle professionals were to join or enforex barcelona teachers a competing firm, that action could have a material adverse effect on our business, results of operations and financial condition.

Furthermore, to the extent investors in certain of our hedge funds have the ability to redeem their investment, the loss of a key manager could trigger redemptions and thus adversely impact the business. Recruiting and retaining professionals may be more 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 and other professionals.

Our future success and growth depends to a substantial degree on our ability to retain and motivate our senior Carlyle professionals and other key personnel and to strategically recruit, retain and motivate new talented personnel, including new senior Carlyle professionals.

However, we may not be successful in our efforts to recruit, retain and motivate the required personnel as the market for qualified investment professionals is extremely competitive. If legislation were to be enacted by the U.

Congress, state or local governments or certain foreign governments to treat carried interest as ordinary income rather than as capital gain for tax purposes, such legislation would materially increase the amount of taxes that we and possibly our unitholders would be required to pay, thereby adversely affecting our ability to recruit, retain and motivate our current and future professionals.

Taxation - Our structure involves complex provisions of U. Congress has considered legislation that would have: If any similar legislation were to be enacted and apply to us, the after-tax income and gain related to our business, as well as our distributions to common unitholders and the market price of our common units, could be reduced. While the number of Carlyle professionals that could be materially impacted by this legislation is relatively small, the potential revisions in the new tax regime in the United Kingdom could make employment at the firm less attractive for certain professionals.

Moreover, the value of the deferred restricted common units we may issue to our employees at any given time may subsequently fall as reflected in the current market price of our common unitswhich could counteract the intended incentives. All of the Carlyle Holdings partnership units held by our founders are fully vested. The unvested Carlyle Holdings units generally will vest in equal installments over the next three years on May 2 of each stock market jobs toronto. In addition, as of December 31,our employees held an aggregate of 18, unvested deferred restricted common units, which vest over various time periods, generally from one and a half to six years from the date of grant.

As of December 31,our employees also held an aggregate of 6, unvested deferred restricted phantom units, which vest over three years from the date of grant. Since our initial public offering we have issued and expect to continue to issue additional equity to retain our employees.

We did not issue any deferred restricted phantom units in 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.

The issuance of equity interests in our business in the future to our senior Carlyle professionals and other personnel would also dilute our unitholders. Given the priority we afford the interests of our fund dendreon call options and our focus on achieving superior investment performance, we may reduce our AUM, restrain its growth, reduce our fees or otherwise alter the terms under which we do business when we deem it in the best interest of our fund investors—even in circumstances where such actions might be contrary to the near-term interests of unitholders.

In pursuing the interests of our fund investors, we may take actions that could reduce the profits we could otherwise realize in the short term. While we believe that our commitment to our fund investors and our discipline in this regard is in the long-term interest of us and our unitholders, our unitholders should understand this approach may have an adverse impact on our short-term profitability, and there is no guarantee that it will be beneficial 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.

Additionally, we may voluntarily reduce management fee rates and terms for certain of our funds or strategies when we deem it appropriate, even when doing so may reduce our short-term revenue. For instance, in order to enhance our relationship with certain fund investors, we have reduced management fees or ceased charging management fees on certain funds in specific instances.

Additionally, 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.

We may receive requests to reduce management fees on other funds in the future. In prioritizing the interests of our fund investors, tab opening hours anzac day victoria may also take other actions that could adversely impact our short-term results of operations when we deem such action appropriate.

We have also waived management fees on certain leveraged finance vehicles at various times to improve returns. Any such delay could result in a deferral of realized carried interest to a subsequent period. We may not be successful in expanding into new investment strategies, markets and businesses, which could adversely affect our business, results of operations and financial condition. Our growth strategy focuses on providing resources to foster the development of new product offerings and business strategies by our investment professionals.

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. For example, in the past we have offered mutual funds, and are considering various investment products open to retail investors. These products may have different economic structures than our traditional investment funds and may require a different marketing approach.

These activities also may impose additional compliance burdens on us, subject us to enhanced regulatory scrutiny and expose us to greater reputation and litigation risk. The success of our growth strategy will depend on, among other things: In some instances, we may determine that growth in a specific area is best achieved through the acquisition of an existing business or a smaller scale lift out msn stockscouter strong buys an investment team to enhance our platform.

Our ability to execute on our acquisition strategy will depend on our ability to identify and value potential acquisition opportunities accurately and successfully compete for these businesses against companies that may have greater financial resources. Even if we are able to identify and successfully negotiate and complete an acquisition, these transactions can be complex and we may encounter unexpected difficulties or incur unexpected costs.

In addition to the concerns noted above, the success of our acquisition growth strategy will be affected by, on among other things: Such actions could negatively impact our relationships with fund investors in those businesses, could subject us to litigation or regulatory inquiries and can expose us to additional expenses, including impairment charges.

For example, in Februarywe decided to restructure our Investment Solutions segment to focus on private market secondaries, co-investment and managed account activities and, given the challenging market environment, discontinue our fund of hedge funds and liquid alternative initiatives. See Note 3 to our consolidated financial statements included in this Annual Report on Form K for more information regarding DGAM.

Our organizational documents do not limit our ability to enter into new lines of business, and we intend to, from time to time, expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.

We intend, to the extent that market conditions warrant, to seek to grow our businesses and cosmos forex bureau mombasa into new investment strategies, geographic markets and businesses.

Our organizational documents do not limit us to the asset management business and to the forex trend scalper v1.1 that we make strategic investments or acquisitions in new geographic markets or businesses, undertake other related strategic initiatives or enter into a new line of business, we may face numerous risks and uncertainties, including risks associated with the following: Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar or from which we are currently exempt, and may lead to increased liability and litigation and regulatory risk and expense.

If a new business generates insufficient revenue or if we are unable to efficiently manage our expanded operations, our results of operations may be adversely affected. Our strategic initiatives may include joint ventures, which may subject us to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under our control. We currently participate in joint advisory arrangements and may elect to participate in additional joint venture opportunities in the future if we believe that operating in such a structure is in our best interests.

There can be no assurances that our current joint advisory arrangements will continue in their current form, or at all, in the future or that we will be on line stock trading brokers axis direct to identify acceptable joint venture partners in the future or that our participation in any additional joint venture opportunities will be successful.

Although not enacted, the U. If any similar legislation were to be enacted and apply to us, the after tax income and gain related to our business, as well as our distributions to common unitholders and the market price of our common units, could be reduced. Over the past several years, a number of legislative and administrative proposals have been introduced and, in certain cases, have been passed by the U.

It is unclear when or whether the U. Congress will vote on this legislation or what provisions will be included in any legislation, if enacted. Some legislative proposals have provided that, for taxable years beginning ten years after the date of enactment, income derived with respect to an ISPI that is not a qualified capital interest and that is subject to the rules discussed above would not meet the qualifying income requirements under the publicly traded partnership rules.

Therefore, if similar legislation is enacted, following such ten-year period, we would be precluded from qualifying as a partnership for U. If we were taxed as a U. In addition, we could be subject to increased state and local taxes. Furthermore, common unitholders could be subject to tax on our conversion into a corporation or any restructuring required in order for us to hold our ISPIs through a corporation. The Obama administration has previously proposed policies similar to several offered in Congress that would tax income and gain, now treated as capital gains, including gain on disposition of interests, attributable to an ISPI at rates higher than the capital gains rate applicable to such income under current law, except to the extent such ISPI would be considered to be a qualified capital interest.

The proposal would also characterize certain income and gain in respect of ISPIs as non-qualifying income under the publicly traded partnership rules after a ten-year transition period from the effective date, with an exception for certain qualified capital interests. More recently, newly-elected Speaker of the House, Paul Ryan, has indicated that comprehensive tax reform will be a high priority for the Republican leadership in Congress.

Should comprehensive tax reform be undertaken, it could include a number of proposals that could be contrary to our business interests. States and other jurisdictions have also considered legislation to increase taxes with respect to carried interest. For example, New York has considered legislation under which common unitholders, even if a nonresident, could be subject to New York state income tax on income in respect of our common units as a result of certain activities of our affiliates in New York, although it is unclear when or whether similar legislation will be enacted.

In addition, states and other jurisdictions have considered legislation to increase taxes involving other aspects of our structure and have considered and enacted legislation which could increase taxes imposed on our income and gain. For example, the District of Columbia forex envy set files download passed legislation that could expand the portion of our income that could be subject to District of Columbia income or franchise tax.

Additional proposed changes in the U. Additionally, the Obama administration has announced forex cheapest broker proposals for potential reform to the U. Several of these proposals for reform, if enacted by the U.

It is unclear what any actual legislation would provide, when it would be proposed or what its prospects for enactment would be. The territorial tax system proposals envisage a revenue neutral result and consequently why trade emini futures revenue raisers to offset the reduction in the tax rate and base which may or may not be detrimental to us.

Other leading members of the Senate have proposed a similar territorial U. Certain of these proposals would also include revenue raises to offset the reduction in the tax rate which may or may not be detrimental to us. Whether these or other proposals will be enacted by Congress and in what form is unknown, as are the ultimate consequences of the proposed legislation. Operational risks, including those associated with our business model, may disrupt our businesses, result in losses or limit our growth.

We rely heavily on our financial, accounting, information and other data processing systems. We face various security threats on a regular basis, including ongoing cyber security threats to and attacks on our information technology infrastructure that are intended to gain access to our proprietary information, destroy data or disable, degrade or sabotage our systems.

These security threats could originate from a wide variety of sources, including unknown third parties outside the company. There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because, as an alternative asset management firm, we hold confidential and other price sensitive information about our portfolio companies and potential investments.

As a result, we may face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments, or cyber terrorists.

If successful, these types of attacks on our network or other systems could have a material adverse effect on our business and results of operations, due to, among other things, the loss of investor or proprietary data, interruptions or delays in our business, and moneysupermarket.com buy to let mortgages to our reputation.

Although we are not currently aware that we have been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, have materially affected our operations or financial condition, 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.

If any of these systems 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 fund investors, regulatory intervention or reputational damage.

The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition, cyber security has become a top priority for regulators around the world.

We operate in businesses that are highly dependent on information systems and technology. 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, new investment products we may introduce could create a significant risk that our existing systems may not be adequate to identify or control the relevant risks in the investment strategies employed by such new investment products. Such a failure to accommodate growth, or an increase in costs related to such information systems. 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 hedge funds.

We depend on our headquarters in Washington, D. However, our global employee base services our investment funds and investor needs out of 36 offices around the world.

In order to reduce expenses in the face of a difficult economic environment, we may need to close smaller offices, terminate the employment of a significant number of our personnel or cut back or eliminate the use of certain services or service providers, that, in each case, could be important to our business and without which our operating results could be adversely affected.

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 headquarters, could have a wikipedia stock market crashes 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. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at all. Sustaining our growth will also require us 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.

Due to the fact that the market for hiring talented professionals is competitive, we may not be able to grow at the pace we desire. Failure to maintain the security of our information and technology networks, including personally identifiable and investor information, intellectual property and proprietary business information could have a material adverse effect on us. We are subject to various risks and costs associated with the collection, handling, storage and transmission of sensitive information, including those related to compliance with U.

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 and our investors, in our data centers and on our networks. 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, there can be no assurance that these measures and investments will provide protection. 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, non-compliance 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.

Such an event could additionally 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.

Extensive regulation in the United States and abroad affects our activities, increases the cost of doing business and creates the potential for significant liabilities and penalties. Our business is subject to extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations in the jurisdictions in which we operate around the world. Many of these regulators, including U. Even if an investigation or proceeding does not result in a sanction or the sanction imposed against us or our personnel by a regulator were small in monetary amount, the costs incurred in responding to such matters could be material and the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing fund investors or fail to gain new investors or discourage others from doing business with us.

Some of our investment funds invest in businesses that operate in highly regulated industries, including in businesses that are regulated by the U. Federal Communications Commission and U.

Moreover, our failure to obtain or maintain any regulatory approvals necessary for our funds to invest in such. In the past several years, the financial services industry, and private equity in particular, has been the subject of heightened scrutiny by regulators around the globe.

In particular, the SEC and its staff have focused more narrowly on issues relevant to alternative asset management firms, including by forming specialized units devoted to examining such firms and, in certain cases, bringing enforcement actions against the firms, their principals and employees. Notably, inthere were a number of enforcement actions within the industry, and it is expected that the SEC will continue to pursue enforcement actions against private fund managers in This increased enforcement activity may cause us to reevaluate certain practices and adjust our compliance control function as necessary and appropriate.

Although the SEC has cited improvements in disclosures and industry practices in this area, it has also indicated that there is room for improvement in particular areas, including fees and expenses and the allocation of such fees and expenses and co-investment practices. To this end, many firms have received inquiries during examinations or directly from the SEC Division of Enforcement regarding various transparency-related topics, including the acceleration of monitoring fees, the allocation of broken-deal expenses, the disclosure of operating partner or operating executive compensation, outside business activities of firm principals and employees, group purchasing arrangements and general conflicts of interest disclosures.

For example, the SEC has recently requested, on an informal basis, additional information about our historical monitoring fee acceleration practices - a topic of a recent enforcement action within the private equity industry.

In addition, our private equity funds frequently engage advisors who often work generally, on a part-time basis with our investment teams during due diligence, provide board-level governance and support and advise portfolio company leadership.

Advisors generally are third parties, not considered Carlyle personnel and typically retained by us pursuant to consulting agreements. Generally these advisors are involved in non-Carlyle related activities, including serving on boards of companies that are not our portfolio companies.

While we believe we have made appropriate and timely disclosures regarding the engagement and compensation of these advisors, the SEC staff may disagree. We regularly are subject to 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 enforced restrictions on colonial manufacturing trade and paper currency have been previously examined are being revisited.

Inthe SEC indicated that investment advisers that receive transaction-based compensation for investment banking or acquisition activities relating to fund portfolio companies may be required to register as broker-dealers.

Specifically, the Staff has noted that if a firm receives fees from a fund portfolio company in connection with the acquisition, disposition or recapitalization of such portfolio company, such fees could raise broker-dealer concerns under applicable regulations related to broker dealers. If receipt of transaction fees from a portfolio company is determined to require a broker-dealer license, receipt of such transaction fees in the past or in the future during any time when we did not or do not have a broker-dealer license could subject us to liability for fines, penalties or damages.

As noted above, the SEC has informally requested additional information about our historical monitoring fee acceleration practices. Even if a regulatory investigation or proceeding does 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 such matters could harm our reputation. In addition, our ability to accelerate such fees in the future could be affected. Similarly, in conducting our asset management activities outside the United States, we rely on available exemptions from the regulatory regimes of various foreign jurisdictions.

These exemptions from regulation within the United States and abroad are sometimes highly complex and may, in certain circumstances, depend on compliance by third parties whom we do not control. If for any reason these exemptions were to become unavailable to us, we could become subject to regulatory action or third-party claims and our business could be materially and adversely affected.

Moreover, the requirements imposed by our regulators are designed primarily to ensure the integrity of the financial markets and to protect investors in our funds and are not designed to protect our unitholders. Consequently, these regulations often serve to limit our activities and impose burdensome compliance requirements. We may become subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform. For example, inwe launched two business development companies that are investment companies under the Investment Company Act and subject to the rules thereunder, which, among other things, regulate the relationship between a registered investment company and its investment adviser and prohibit or severely restrict principal transactions and joint transactions.

These additional regulatory requirements may expose us to liabilities and penalties if we fail to comply with the applicable rules and regulations. In some cases, the ITRA requires companies to disclose transactions even if they were permissible under U. Although the ITRA also expanded the scope of U.

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The JCPOA did not alter, however, our ITRA obligation to separately file with the SEC a notice that specified activities have been disclosed in our quarterly and annual reports, and the SEC is required to post this notice of disclosure on its website and send the report to the U.

President and certain U. Disclosure of ITRA-specified activity, even if such activity is not subject to sanctions under applicable law, and any sanctions actually imposed on us or our affiliates as a result of any Iran-related activities, could harm our reputation and have a negative impact on our business.

In the past, we have disclosed such dealings and transactions and to date, we have not received notice of any investigation into such activities. Regulatory changes 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.

As a result of the global financial crisis and highly publicized financial scandals, investors have exhibited concerns over the integrity of the U. There has been an active debate over the appropriate extent of regulation and oversight of private investment funds and their managers. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC or other U. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations.

Regulatory focus on our industry has intensified in recent years and is expected to continue to do so. Among other things, the Dodd-Frank Act includes the following provisions, which could have an adverse impact on our ability to conduct our business: The The Dodd-Frank Act imposes a number of restrictions on the relationship and activities of banking organizations with private equity funds and hedge funds and other provisions that will affect the private equity industry, either directly or indirectly.

The Volcker Rule also requires certain nonbank financial companies that have been designated as systemically important by the Financial Stability Oversight Council FSOC and subject to supervision by the Federal Reserve to comply with additional capital. In connection with the Dodd-Frank Act, 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.

The final rule generally requires covered swap entities, subject to certain thresholds and exemptions for inter-affiliate swaps, to collect and post margin in respect of uncleared swap transactions with other covered swap entities and financial end-users.

These newly adopted rules on margin requirements for uncleared swaps could adversely affect our business, including our ability to enter such swaps or our available liquidity. In Octoberfive federal banking and housing agencies the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, and the Federal Housing Finance Agency and the SEC issued the final credit risk retention rules.

With respect to the regulation of CLOs, the U. Risk Retention Rules will not become fully effective until December 24, and CLOs issued prior to that date will be exempt from the requirements set forth in the U. Risk Retention Rules, except in connection with any offer and sale of securities thereunder after the U.

Risk Retention Effective Datethe U. While the impact of the rule on the loan securitization market and the leveraged loan market generally are uncertain, it is possible that any negative impact on secondary market liquidity for CLO securities may be experienced immediately, notwithstanding the effective date of the rule as to new transactions, due to effects of the rule on market expectations and the relative appeal of alternative investments not impacted by the rule or other factors.

In addition, it is possible that the rule may reduce the number of collateral managers active in the market, which may result in fewer new issue CLOs and reduce the liquidity provided by CLOs to the leveraged loan market generally. A contraction or reduced liquidity in the loan market could reduce opportunities for us and other CLO managers. The Dodd-Frank Act 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.

Such restrictions could limit our ability to recruit and retain investment professionals and senior management executives. The Dodd-Frank Act requires public companies to adopt and disclose policies requiring, in the event the company is required to issue an accounting restatement, the clawback of any related incentive compensation from current and former executive officers.

On December 18,the FSOC released a notice seeking public comment regarding potential risks to U. The notice is intended to seek input from the public about potential risks to the U. To date, the FSOC has not designated any asset managers, including Carlyle, as a systemically important financial institution.

However, if we or any of our funds or activities were to be designated as a systemically important financial institution, or otherwise designated by the FSOC as presenting systemic risk, we would be subject to increased costs of doing business by virtue of fees and assessments associated with such designation as well as by virtue of increased regulatory compliance costs, all of which would be likely to adversely affect our competitive position.

The rule prohibits investment advisers from providing advisory services for compensation to a government client for two years, subject to very limited exceptions, after the investment adviser, its senior executives or its personnel involved in soliciting investments from government entities make contributions to certain candidates and officials in position to influence the hiring of an investment adviser by such government client.

Any failure on our part to comply with the rule could expose us to significant penalties, loss of fees, and reputational damage. If enacted, the FINRA rule effectively prohibits the receipt of compensation from state or local government agencies for solicitation and distribution activities within two years of a prohibited contribution by a broker-dealer or one of its covered associates.

In DecemberFINRA submitted revised proposals to the SEC for adoption and we are awaiting the release of the final regulations. In addition, we may be impacted indirectly by guidance recently directed to regulated banking institutions with regard to leveraged lending practices.

In Marchthe U. To the extent that such guidance limits the amount or increases the cost of financing we are able to obtain for our transactions, the returns on our investments may suffer.

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, require the attention of our senior management or result in limitations on the manner in which we conduct our business. Moreover, as calls for additional regulation have increased, there may be a related increase in regulatory investigations of the trading and other investment activities of alternative asset management funds, including our 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. The short-term and long-term impact of the new Basel III capital standards is uncertain. These new standards, which will be fully phased in bywill require banks to hold more capital, predominantly in the form of common equity, than under the current capital framework.

Implementation of Basel III will require implementing regulations and guidelines by member countries. In Julythe U. Compliance with the Basel III standards may result in significant costs to banking organizations, which in turn may result in higher borrowing costs for the private sector and reduced access to certain types of credit.

Recent regulatory changes 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 Europe, has become subject to further regulation.

CRD IV implements the key Basel III reforms in the EU. These include amendments to the definition of capital and counterparty credit risk and the introduction of a leverage ratio and liquidity requirements. CRD IV has also been used to introduce other reforms, such as the cap on bankers' bonuses, and generally to introduce stricter control on remuneration of key employees and risk takers within certain credit institutions and investment firms. Member states were required to transpose these requirements from January 1, In addition, it is possible that other regulators may seek to impose similar controls on the provisions on renumeration.

However, to the extent that European regulators determine that Carlyle must comply with these restrictions or such regulators incorporate similar restrictions into other European directives to which Carlyle is subject, it may be necessary for certain of our subsidiaries to change their compensation structures for key personnel, thereby affecting our ability to recruit and retain these personnel. The AIFMD also regulates and imposes regulatory obligations in respect of the marketing in the EEA by AIFMs whether established in the EEA or elsewhere of AIFs whether established in the EEA or elsewhere.

The AIFMD is intended to have a staged implementation throughbut certain key milestones related to the implementation have been delayed. As a result of the business activities of certain of our subsidiaries, such subsidiaries currently are subject to various compliance obligations in connection with the AIFMD, including investor and regulatory reporting, portfolio company asset stripping restrictions, deal-related notifications and remuneration reporting.

AlpInvest, one of our subsidiaries, obtained authorization in and is licensed as an AIFM under the AIFMD by the Authority for Financial Markets in the Netherlands. Further, to the extent that other of our subsidiaries obtain authorization under the AIFMD, additional compliance obligations also will apply to these and other of our entities, including rules relating to the remuneration of certain personnel, minimum regulatory capital requirements and restrictions on use of leverage.

Certain of our European subsidiaries must comply with the pan-European regime established by MiFID which regulates the provision of investment services and conduct of investment activities throughout the European Economic Area. MiFID II was published in and is scheduled to become effective in When effective, MiFID II will enhance numerous aspects of the existing regulations and is expected to impose many new compliance requirements on our European operations, which will increase our costs of compliance.

We may be required to invest significant additional management time and resources to address the new requirements.

The circular includes new rules relating to the establishment, fundraising and investment scope of such funds; risk control mechanisms; basic responsibilities and duties of fund managers; information disclosure systems; and record filing. Compliance with these requirements may impose additional expense.

These new regulations adopt a very broad definition of private investment funds, potentially including private equity and hedge funds. Changes in tax laws by foreign jurisdictions could arise as a result of BEPS projects being undertaken by the OECD. The OECD, which represents a coalition of member countries, is contemplating changes to numerous tax principles. These contemplated changes, if finalized and adopted by countries, could increase uncertainty faced by us, our business and our investors, change our business model or increase the cost of acquiring businesses.

The timing or impact of these proposals is unclear at this point. There are also continual changes to tax laws, regulations and interpretations regularly which could impact our structures or the returns to investors.

Among other things, such requirements restrict an investor who is subject to the EU Risk Retention and Due Diligence Requirements, including us, from investing in securitizations unless: The European Commission, on September 30,proposed new regulations which would, among other things, consolidate and restate the different EU Risk Retention and Due Diligence Requirements into a single rule that would apply to the types of investors subject to the existing EU Risk Retention and Due Diligence Requirements and to certain other types of EU institutional investors.

At this time it is uncertain to what extent any changes in the existing EU Risk Retention and Due Diligence Requirements will apply to existing transactions and there can be no assurances as to whether and to what extent such transactions will be affected by a change in law or regulation relating to the EU Risk Retention and Due Diligence Requirements.

Failure to comply with one or more of the requirements may result in various penalties, including, in the case of those investors subject to regulatory capital requirements, the imposition of a punitive capital charge on the notes issued by our CLOs acquired by the relevant investor. In addition such regulations could have a negative impact on the price and liquidity of certain of our EU CLO notes in the secondary market. Our investment businesses are subject to the risk that similar measures might be introduced in other countries in which our 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. Rapidly changing regulations regarding derivatives and commodity interest transactions could adversely impact various aspects of our business. 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.

We and our affiliates enter into derivatives and commodity interest transactions for various purposes, including to manage the financial risks related to our business.

Accordingly, the impact of this evolving regulatory regime on our business is difficult to predict, but it could be substantial and adverse. As such, our business may incur increased ongoing costs associated with monitoring compliance with the CFTC registration and exemption obligations across platforms and complying with the various reporting and record-keeping requirements.

In addition, derivatives regulations in the United States and Europe are effectively transforming an over-the-counter market in which parties negotiate directly with each other into a regulated market in which a majority of swap transactions are executed on registered exchanges and cleared through central counterparties. These regulations could significantly increase the cost of entering into derivative contracts including through requirements to post collateral which could adversely affect our.

We are evaluating final rules promulgated separately by the CFTC and certain U. If we reduce our use of derivatives as a result of such regulations and any new regulationsour results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to satisfy our debt obligations or plan for and fund capital expenditures. Furthermore, the CFTC has proposed rules relating to position limits on derivatives including futures, options and swaps with certain underlying reference assets, as well as supplemental rules relating to the aggregation of derivative positions among commonly owned or controlled entities and exemptions from such aggregation.

Certain of the CFTC commissioners have indicated publicly that the agency intends to finalize these rules in In addition to these U. As proposed, MiFID II includes intra-day aggregation requirements for certain derivative positions. Currently, MiFID II is scheduled to come into effect in January The finalization of these various rules and our ability to rely on any exemption thereunder may affect the size and types of investments we may make.

Moreover, in order to avoid exceeding position limits, it is possible that we and our affiliates may need to significantly alter our business processes related to such trading, including by modifying trading strategies and instructions. We are subject to substantial litigation risks and may face significant liabilities and damage to our professional reputation as a result of litigation allegations and negative publicity. In the ordinary course of business, we are subject to the risk of substantial litigation and face significant regulatory oversight.

In recent years, the volume of claims and the amount of potential damages claimed in such proceedings against the financial services industry have generally been increasing. The investment decisions we make in our asset management business and the activities of our investment professionals on behalf of portfolio companies of our carry funds may subject them and us to the risk of third-party litigation arising from investor dissatisfaction with the performance of those investment funds, alleged conflicts of interest, the activities of our portfolio companies and a variety of other litigation claims and regulatory inquiries and actions.

From time to time we and our portfolio companies have been and may be subject to regulatory actions and shareholder class action suits relating to transactions in which we have agreed to acquire public companies. In addition, to the extent that 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 principals or our affiliates. Heightened standards of care or additional fiduciary duties may apply in certain of our managed accounts or other advisory contracts.

Even in the absence of misconduct, we may be exposed to litigation or other adverse consequences where investments perform poorly and investors in or alongside our funds experience losses. For example, as described in Note 17 to the consolidated financial statements included in this Annual Report on Form K, Urbplan Desenvolvimento Urbano S. If Urbplan fails to complete its construction projects, customers or other creditors in certain circumstances might seek to assert claims against us under certain consumer protection or other laws.

The general partners and investment advisers to our investment funds, including their directors, officers, other employees and affiliates, are generally indemnified with respect to their conduct in connection with the management of the business and affairs of our private equity funds. If any lawsuits were brought against us and resulted in a finding of substantial legal liability, the lawsuit could materially adversely affect our business, results of operations or financial condition or cause significant reputational harm to us, which could materially impact our business.

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 of improper conduct by private litigants including investors in or alongside our funds or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the private equity industry in general, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses. In addition, with a workforce composed of many highly paid professionals, we face the risk of litigation relating to claims for compensation, which may, individually or in the aggregate, be significant in amount.

The cost of settling any such claims could negatively impact our business, results of operations and financial condition. Employee misconduct could harm us by impairing our ability to attract and retain investors in our funds and subjecting us to significant legal liability and reputational harm. Fraud and other deceptive practices or other misconduct at our portfolio companies could similarly subject us to liability and reputational damage and also harm performance.

There is a risk that our employees or advisors could engage in misconduct that adversely affects our business. Our ability to attract and retain investors and to pursue investment opportunities for our funds depends heavily upon the reputation of our professionals, especially our senior Carlyle professionals.

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 us and our investment funds and fund investors. Our business often requires that we deal with confidential matters of great significance to companies in which our funds may invest.

If our employees were to use or disclose confidential information improperly, we could suffer serious harm to our reputation, financial position and current and future business relationships, as well as face potentially significant litigation.

It is not always possible to detect or deter employee misconduct, and the extensive precautions we take to detect and prevent this activity may not be effective in all cases. If any of our employees were to engage in misconduct or were to be accused of such misconduct, whether or not substantiated, our business and our reputation could be adversely affected and a loss of investor confidence could result, which would adversely impact our ability to raise future funds.

In recent years, the U. In addition, the United Kingdom has significantly expanded the reach of its anti-bribery laws. While we have developed and implemented policies and procedures designed to ensure compliance by us and our personnel with the FCPA and the UK anti-bribery laws, such policies and procedures may not be effective in all instances to prevent violations.

Any determination that we have violated the FCPA, the UK anti-bribery laws or other applicable anticorruption laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects, financial position or the market value of our common units.

In addition, we will also be adversely affected if there is misconduct by personnel of portfolio companies in which our funds invest. For example, failures by personnel at our portfolio companies to comply with anti-bribery, trade sanctions or other legal and regulatory requirements could adversely affect our business and reputation.

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.

As a result of the expansion of our platform into various lines of business in the alternative 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 that to which we would otherwise be subject if we had just one line of business.

In addition, as we expand our platform, the allocation of investment opportunities among our investment funds is expected to become more complex.

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In addressing these conflicts and regulatory requirements across our various businesses, we have and may continue to implement certain policies and procedures for example, information barriers.

For example, although we maintain ultimate control over the Investment Solutions segment's constituent firms: AlpInvest and Metropolitan, we have erected an information barrier between the management teams at these firms and the rest of Carlyle.

As a consequence, we may be precluded from providing such information or other ideas to our other businesses that could benefit from such information. Risks Related to Our Business Operations. Poor performance of our investment funds would cause a decline in our revenue, income and cash flow, may obligate us to repay carried interest previously paid to us, and could adversely affect our ability to raise capital for future investment funds.

In the event that any of our investment funds were to perform poorly, our revenue, income and cash flow could decline. In some of our funds, such as our hedge funds, a reduction in the value of our AUM in such funds would result in a reduction in management fees and incentive fees we earn.

In other funds we manage, such as our private equity 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.

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. 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 unitholders did not receive any benefit.

Poor performance of our investment funds may also make it more difficult for us to raise new capital. Investors in carry funds and fund of funds vehicles might decline to invest in future investment funds we raise and investors in hedge funds or other investment funds might withdraw their investments.

Accordingly, poor fund performance may deter future investment in our funds and thereby decrease the capital invested in our funds and ultimately, our management fee income. Our asset management business depends in large part on our ability to raise capital from third-party investors. If we are unable to raise capital from third-party investors, we would be unable to collect management fees or deploy their capital into investments and potentially collect carried interest, which would materially reduce our revenue and cash flow and adversely affect our financial condition.

Our ability to raise capital from third-party investors depends on a number of factors, including certain factors that are outside our control.

Certain factors, such as the performance of the stock market, the pace of distributions from our funds and from the funds of other asset managers or the asset allocation rules or regulations or investment policies to which such third-party investors are subject, could inhibit or restrict the ability of third-party investors to make investments in our investment funds.

Third-party investors in private equity, real assets and venture capital funds typically use distributions from prior investments to meet future capital calls. In cases where valuations of existing investments fall and the pace of distributions slows, investors may be unable or unwilling to make new commitments or fund existing commitments to third-party management investment funds such as those advised by us.

Although many investors have increased the amount of commitments they are making to alternative investment funds and aggregate fundraising totals are near the highest they've been sincethere can be no assurance that this historical or current levels of commitments to our funds will continue.

For example, there is a continuing shift away from defined benefit pension plans to defined contributions plans, which could reduce the amount of assets available for us to manage on behalf of certain of our clients.

In addition, investors may downsize their investment allocations to alternative managers, including private funds and hedge funds, to rebalance a disproportionate weighting of their overall investment portfolio among asset classes. Investors may also seek to consolidate their investments with a smaller number of alternative asset managers or prefer to pursue investments directly instead of investing through our funds, each of which could impact the amount of allocations they make to our funds.

Moreover, as some existing investors cease or significantly curtail making commitments to alternative investment funds, we may need to identify and attract new investors in order to maintain or increase the size of our investment funds.

The lack of clarity around regulations, including BEPS, may also limit our fund investors' ability to claim double tax treaty benefits on their investments, which may limit their investments in our funds.

We are currently working to create avenues through which we expect to attract a new base of individual investors. There can be no assurances that we can find or secure commitments from those new investors. Our ability to raise new funds could similarly be hampered if the general appeal of private equity and alternative investments were to decline. An investment in a private equity fund is more illiquid and the returns on such investment may be more volatile than an investment in securities for which there is a more active and transparent market.

Private equity and alternative investments could fall into disfavor as a result of concerns about liquidity and short-term performance. Such concerns could be exhibited, in particular, by public pension funds, which have historically been among the largest investors in alternative assets. Concerns with liquidity could cause such public pension funds to reevaluate the appropriateness of alternative investments.

Unlike our closed-end investment funds, our open-ended hedge funds are subject to redemptions on a quarterly or more frequent basis and investors can generally decide to exit their fund investments at any time.

In addition, the evolving preferences of our fund investors may necessitate that alternatives to the traditional investment fund structure, such as managed accounts, smaller funds and co-investment vehicles, become a larger part of our business going forward.

This could increase our cost of raising capital at the scale we have historically achieved. The failure to successfully raise capital commitments to new investment funds may also expose us to credit risk in respect of financing that we may provide such funds.

Our inability to identify and secure capital commitments from new investors to these funds may expose us to losses in the case of money that we lend directly to such funds or adversely impact our ability to repay such borrowings or otherwise have an adverse impact on our liquidity position. Finally, if we seek to expand into other business lines, we may also be unable to raise a sufficient amount of capital to adequately support such businesses.

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The failure of our investment funds to raise capital in sufficient amounts could result in a decrease in our AUM as well as management fee and transaction fee revenue, or could result in a decline in the rate of growth of our AUM and management fee and transaction fee revenue, any of which could have a material adverse impact on our revenues and financial condition. Our past experience with growth of AUM provides no assurance with respect to the future.

Growing investor demands may also increase our expenses. To address the evolving needs of our investor base, we have expanded our LP relations team, deepened our relationships with intermediaries and made investments in our investor services and global technology and solutions departments. These advances have increased our operating expenses and may continue to do so. 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.

For instance, we have received and expect to continue to receive requests from a variety of investors and groups representing investors to increase the percentage of transaction fees we share with our investors or to decline to receive any transaction fees from portfolio companies owned by our funds. To the extent we accommodate such requests, it could result in a decrease in the amount of fee revenue we earn.

Additionally, a change in terms which increases the amount of fee revenue the fund investors are entitled to could result in a significant decline in revenue generated from transaction 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. 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.

In addition, certain institutional investors, including sovereign wealth funds and public pension funds, have demonstrated an increased preference for alternatives to the traditional investment fund structure, such as managed accounts, smaller funds and co-investment vehicles. There can be no assurance that such alternatives will be as efficient as the traditional investment fund structure, or as to the impact such a trend could have on the cost of our operations or profitability if we were to implement these alternative investment structures.

Moreover, certain institutional investors are demonstrating a preference to in-source their own investment professionals and to make direct investments in alternative assets without the assistance of private equity advisers like us. Such institutional investors may become our competitors and could cease to invest in our funds. 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 fees.

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.

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 and structured vehicles, 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. The determination of fair value using these methodologies takes into consideration a range of factors including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, the multiples of comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment.

These valuation methodologies involve a significant degree of management judgment. For example, as to investments that we share with another sponsor, we may apply a different valuation methodology than the other sponsor does or derive a different value than the other sponsor has derived on the same investment, which could cause some investors to question our valuations.

Realizations at values significantly lower than the values at which investments have been reflected in prior fund net asset values would result in reduced earnings or losses for the applicable fund, the loss of potential carried interest and incentive fees and in the case of our hedge funds, management 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.

Also, a situation where asset values turn out to be materially different than values reflected in prior fund net asset values could cause investors to lose confidence in us, which could in turn result in difficulty in raising additional funds. The historical returns attributable to our funds, including those presented in this report, 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 units.

We have presented in this report 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 on our common units. 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 units. 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 units.

Moreover, with respect to the historical returns of our investment funds: 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 will also be affected by the risks described elsewhere in this report, including risks of the industries and businesses in which a particular fund invests.

Dependence on significant leverage in investments by our funds could adversely affect our ability to achieve attractive rates of return on those investments. The absence of available sources of sufficient debt financing for extended periods of time could therefore materially and adversely affect our CPE and Real Assets businesses.

In addition, 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. Increases in interest rates could also 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.

In addition, a portion of the indebtedness used to finance private equity 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.

Certain investments may also 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.

Any change in such tax law or policy to eliminate or substantially limit these income tax deductions, as has been discussed from time to time in various jurisdictions, would reduce the after-tax rates of return on the affected investments, which may have an adverse impact on our business and financial results. On October 5,the OECD published additional papers under the BEPS initiative.

In action 4, the OECD recommends that countries adopt a limitation on excessive deductions under a fixed ratio rule and supplemented by a worldwide group ratio and certain targeted rules as needed. It is still unclear how different countries will implement the various recommendations and it is unclear how this will affect the current deductibility of interest in the various jurisdictions. Investments in highly leveraged entities are also inherently more sensitive to declines in revenue, increases in expenses and interest rates and adverse economic, market and industry developments.

Furthermore, the incurrence of a significant amount of indebtedness by an entity could, among other things: As a result, the risk of loss associated with a leveraged entity is generally 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. Many of our GMS 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.

Increases in interest rates could also decrease the value of fixed-rate debt investment that our investment funds make. Any of the foregoing circumstances could have a material adverse effect on our results of operations, financial condition and cash flow. A decline in the pace or size of investments by our carry funds or fund of funds vehicles could result in our receiving less revenue from transaction fees.

The transaction fees that we earn are driven in part by the pace at which our funds make investments and the size of those investments. Any decline in that pace or the size of such investments could reduce our transaction fees and could make it more difficult for us to raise capital on our anticipated schedule.

Many factors could cause such a decline in the pace of investment, including: In addition, we have confronted and expect to continue to confront requests from a variety of investors and groups representing investors to increase the percentage of transaction fees we share with our fund investors or to decline to receive transaction fees from portfolio companies held by our funds.

To the extent we change our current fee practices, it could result in a decrease in the amount of fee revenue we earn. For example, in our latest U. The alternative asset management business is intensely competitive. The alternative asset management business is intensely competitive, with competition based on a variety of factors, including investment performance, business relationships, quality of service provided to investors, investor liquidity and willingness to invest, fund terms including feesbrand recognition, types of products offered and business reputation.

Our alternative asset management business, as well as our investment funds, competes with a number of private equity funds, specialized investment funds, hedge funds, corporate buyers, traditional asset managers, real estate development companies, commercial banks, investment banks and other financial institutions as well as sovereign wealth funds and other institutional investors.

A number of factors serve to increase our competitive risks: We may lose investment opportunities in the future if we do not match investment prices, structures, products or terms offered by our competitors.

Alternatively, we may experience decreased rates of return and increased risks of loss if we match investment prices, structures and terms offered by our competitors. Moreover, if we are forced to compete with other alternative 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 alternative asset management industry will decline, without regard to the historical performance of a manager.

Fee or carried interest income reductions on existing or future funds, without corresponding decreases in our cost structure, would adversely affect our revenues and profitability.

The attractiveness of our investment funds relative to investments in other investment products could decrease depending on economic conditions. This competitive pressure 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.

The due diligence process that we undertake in connection with investments by our investment funds may not reveal all facts that may be relevant in connection with an investment.

Before making private equity and other investments, we conduct due diligence that we deem reasonable and appropriate based on the facts and circumstances applicable to each investment. The objective of the due diligence process is to identify attractive investment opportunities based on the facts and circumstances surrounding an investment and, in the case of private equity investments, prepare a framework that may be used from the date of an acquisition to drive operational achievement and value creation.

When conducting due diligence, we may be required to evaluate important and complex business, financial, regulatory, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment.

Nevertheless, when conducting due diligence and making an assessment regarding an investment, we rely on the resources available to us, including information provided by the target of the investment and, in some circumstances, third-party investigations and analysis. The due diligence process may at times be subjective with respect to newly-organized companies for which only limited information is available. Accordingly, we cannot be certain that the due diligence investigation that we carry out with respect to any investment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity.

Because a carve-out business usually may not have financial statements that accurately reflect its true financial performance as a stand-alone business, due diligence assessments of such investments can be particularly difficult. Instances of fraud, accounting irregularities and other improper, illegal or deceptive practices can be difficult to detect, and fraud and other deceptive practices can be widespread in certain jurisdictions.

Several of our funds invest in emerging market countries that may not have established laws and regulations that are as stringent as in more developed nations, or where existing laws and regulations may not be consistently enforced.

Due diligence on investment opportunities in these jurisdictions is frequently more complicated because consistent and uniform commercial practices in such locations may not have developed. Fraud, accounting irregularities and deceptive practices can be especially difficult to detect in such locations. We cannot be certain that our due diligence investigations will result in investments being successful or that the actual financial performance of an investment will not fall short of the financial projections we used when evaluating that investment.

Failure to identify risks associated with our investments could have a material adverse effect on our business. Our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of our principal investments. Many of our investment funds invest in securities that are not publicly traded. In many 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 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.

Additionally, certain provisions of the U. Accordingly, under certain conditions, our investment funds may be forced to either sell securities at lower prices than they had expected to realize or defer, potentially for a considerable period of time, sales that they had planned to make. We have made and expect to continue to make significant principal investments in our current and future investment funds. Contributing capital to these investment funds is subject to significant risks, and we may lose some or all of the principal amount of our investments.

The investments of our private equity funds are subject to a number of inherent risks. Our results are highly dependent on our continued ability to generate attractive returns from our investments. Investments made by our private equity funds involve a number of significant risks inherent to private equity investing, including the following: Our real estate funds are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate.

Investments in our real estate funds will be 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: Real estate markets may experience sharp increases in capitalization rates and declines in value as a result of the overall economic decline and the limited availability of financing and the value of certain investments in our real estate funds may decline significantly, as was the case in and in the United States, Europe and Japan.

In addition, if our real estate funds acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, they will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction including risks beyond the control of our fund, such as weather or labor conditions or material shortages and the availability of both construction and permanent financing on favorable terms.

Any of these factors may cause the value of the investments in our real estate funds to decline, which may have a material impact on our results of operations. We often pursue investment opportunities that involve business, regulatory, legal or other complexities. As an element of our investment style, we may pursue unusually complex investment opportunities. This can often take the form of substantial business, regulatory, tax, or legal complexity that would deter other asset managers.