What changed in this filing

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Item 1A. Risk Factors

2022-02-10 compared with 2021-02-11 · 755 added, 541 removed, 1128 unchanged (53% of the section changed)

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 global growth, changes in laws (including laws relating to taxation and regulations on the financial industry), disease, pandemics or other severe public health events, trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances (including government shutdowns, wars, terrorist acts or security operations).

For example, the COVID-19 pandemic has resulted in a widespread health crisis that continues to adversely affect general commercial activity and the economies and financial markets of many countries.

Such unforeseen and catastrophic events could adversely affect the businesses, financial conditions and results of operations of us and our funds’ portfolio companies and assets.

These factors may affect the level and volatility of securities prices and the liquidity and the value of investments, and we may not be able to or may choose not to manage our exposure to these market conditions and/or other events.

Adverse economic and market conditions and other events or conditions throughout the world could negatively impact our business in many ways, including by reducing the value or performance of the investments made by our investment funds and reducing the ability of our investment funds to raise capital, any of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.

Our business 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 global growth, changes in laws (including laws relating to taxation and regulations on the financial industry), disease, pandemics or other severe public health events, trade barriers, commodity prices, currency exchange rates and controls, national and international political circumstances (including government shutdowns, wars, terrorist acts or security operations), geopolitical tensions, social unrest, supply chain pressures, and the effects of climate change.

Recently, markets have been affected by the COVID-19 pandemic, U.S.

interest rates, inflation, heightened geopolitical tensions (including those between the U.S.

and China and between Russia and Ukraine), the imposition of trade barriers, ongoing trade negotiations with major U.S.

trading partners and changes in U.S.

tax regulations.

These conditions, events and factors are outside our control and may affect the level and volatility of securities prices and the liquidity and the value of investments, and we may not be able to or may choose not to manage our exposure to them.

In the event of a market downturn, each of our businesses could be affected in different ways.

Over the twelve months ending December 31, 2021, the S&P 500 increased by 27%, while the MSCI All Country World Index (MSCI) rose by 17%.

While global markets performed well in the aggregate, the onset of the COVID-19 pandemic earlier in the year resulted in periods of notable volatility such as a 34% peak-to-trough decline in the S&P 500 from mid-February through late March.

Market performance was also highly uneven across asset classes as investors assessed the pandemic’s differing impacts by geography and industry.

Due to the severity of the pandemic and uncertainty surrounding Brexit, the UK-focused FTSE 100 ended the year down 14% while the tech-heavy NASDAQ Composite returned 44%.

Throughout the year, market performance was continuously affected by developments in case counts, fiscal stimulus measures,

global central bank policies, real economic data, and vaccine progress.

As such, it is possible investor sentiment could change quickly once more and market volatility could reemerge in the face of negative macro or geopolitical developments, such as disappointing economic data, vaccine roadblocks or delays, the emergence of vaccine resistant strains of the coronavirus, political uncertainty or unexpected changes in fiscal and monetary policy.

While global markets performed well in the aggregate, developments such as rapidly rising inflation, shifting views on monetary policy, and regulatory actions, drove spikes of volatility and strong rotations out of certain assets which had previously outperformed in 2020.

For example the CSI 300 Index fell by 5% in 2021 after strongly outperforming the S&P 500 in 2020, as market participants reacted to government regulatory crackdowns on private enterprise and debt troubles in the property sector.

markets, interest rate volatility adversely affected the equity performance of companies with longer-duration cash flows;

prices of companies in the Nasdaq 100 with no profits fell 20% in 2021, compared with a +27% return for the overall index.

Many of these factors, including inflation, interest rates, regulatory and political environments, can be unpredictable so it is possible investor sentiment could change quickly in the future and market volatility could reemerge in the face of negative macro or geopolitical developments.

If global markets become unstable, it is possible sellers may readjust their valuations and attractive investment opportunities may become available.

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Further, investors often evaluate the amount of distributions they have received from existing funds when considering commitments to new funds.

General market volatility and/or a reduction in distributions to investors could cause investors to delay making new commitments to investment funds.

With several funds in the market, a decrease in the amount an investor commits to our funds could have an impact on the ultimate size of the fund and amount of management fees we generate.

Investors may also weigh the likely impact of geopolitical tensions, cross-border regulations and other factors such as general market volatility and/or a reduction in distributions to investors when considering their allocations to new investment funds.

A decrease in the amount an investor commits to our funds could have an impact on the ultimate size of our funds and amount of management fees we generate.

The availability and cost of financing for significant acquisition and disposition transactions could be impacted if equity and credit markets experience heightened volatility.

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A slowdown in the deployment of our available capital could also adversely affect our ability to raise and the timing of raising successor investment funds.

In 2020, we invested more than $18 billion through our carry funds.

In 2021, we invested nearly $34 billion through our carry funds.

The current U.S.

political environment and the resulting uncertainties regarding actual and potential shifts in U.S.

foreign, trade, economic, environmental and other policies under the new Administration could lead to disruption, instability and volatility in the global markets, which may also have an impact on our exit opportunities across negatively impacted sectors or geographies.

foreign investment, trade, taxation, economic, environmental and other policies under the current Administration, as well as the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S.

and China or an escalation in conflict between Russia and Ukraine, could lead to disruption, instability and volatility in the global markets, which may also have an impact on our exit opportunities across negatively impacted sectors or geographies.

The consequences of previously enacted legislation could also impact our business operations in the future.

For example, bipartisan legislation enacted in August 2018 may significantly increase the number of transactions that are subject to the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”).

Under the final regulations of the reform legislation, which became effective on February 13, 2020, CFIUS has the authority to review, and potentially recommend that the President block or impose conditions on non-controlling investments in critical infrastructure and critical technology companies and in companies collecting or storing sensitive data of U.S.

citizens, which may reduce the number of potential buyers and limit the ability of our funds to realize value from certain existing and future investments.

We are unable to predict whether and to what extent uncertainty surrounding economic and market conditions will be reduced, and even in the absence of uncertainty, adverse conditions and/or other events in particular sectors may cause our performance to suffer further.

For example, bipartisan legislation enacted in August 2018 has significantly increased and may continue to significantly increase the number and types of investment transactions that are subject to the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”).

Under the final regulations implementing the reform legislation, which became effective in October 2020, CFIUS has the authority to review, and potentially recommend that the President unwind, block or impose conditions on certain non-controlling foreign investments in U.S.

businesses that deal in certain ways with “critical technology,” “critical infrastructure” and/or “sensitive personal data” of U.S.

citizens (as those terms are defined in the regulations).

CFIUS’ expanded jurisdiction may reduce the number of potential buyers of and investors in U.S.

companies, and accordingly, may limit the ability of our funds to realize value and/or exit from certain existing and future investments.

Our flexibility in structuring or financing certain transactions may likewise be constrained and we are unable to predict whether and to what extent uncertainty surrounding economic and market conditions or adverse conditions or events in particular sectors may cause our performance to suffer.

The current Administration may also pursue tax policies seeking to increase the corporate tax rate and further limit the deductibility of interest and compensation, or materially alter the taxation of capital gains, among other things.

Such changes could materially increase the taxes imposed on us or our funds’ portfolio companies.

See “—Risks Related to Taxation—Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could negatively impact our effective tax rate and tax liability.” In addition, negative public sentiment could lead to heightened scrutiny and criticisms of our business and investments.

During periods of difficult market conditions or slowdowns (which may occur across one or more industries or geographies), our funds’ portfolio companies may experience adverse operating performance, decreased revenues, financial losses, credit rating downgrades, difficulty in obtaining access to financing and increased funding costs.

Negative financial results in our funds’ portfolio companies may result in less appreciation across the portfolio and lower returns in our funds.

Because our investment funds will generally make a limited number of investments, and such investments generally involve a high degree of risk, negative financial results in a few of a investment fund’s portfolio companies could severely impact the fund’s total returns.

Because our investment funds will generally make a limited number of investments, and such investments generally involve a high degree of risk, negative financial results in a few of an investment fund’s portfolio companies could severely impact the fund’s total returns.

This could materially and adversely affect our ability to raise new funds as well as our operating results and cash flow.

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Furthermore, such negative market conditions could potentially result in a portfolio company entering bankruptcy proceedings, or in the case of certain real estate funds, the abandonment or foreclosure of investments, thereby potentially resulting in a complete loss of the fund’s investment in such portfolio company or real assets and a significant negative impact to the fund’s performance and consequently our operating results and cash flow, as well as to our reputation.

negative market conditions would also increase the risk of default with respect to investments held by our funds that have significant debt investments, such as our Global Credit funds.

In addition, negative market conditions would also increase the risk of default with respect to investments held by our funds that have significant debt investments, such as our Global Credit funds.

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 revenues to us or the creation of the obligation to repay performance revenues previously received by us.

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The generation of less performance revenues 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.

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.

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.

The global outbreak of the novel coronavirus, or COVID-19, caused severe disruptions in the U.S.

and global economies and has impacted, and may continue to adversely impact our performance and results of operations.

The global pandemic of the novel coronavirus, or COVID-19, caused severe disruptions in the U.S.

and global economies and has impacted, and may continue to impact our performance and results of operations.

In 2020, the global outbreak of COVID-19 spread to every country and every state in the United States.

The World Health Organization designated COVID-19 as a pandemic, and numerous countries, including the United States, declared national emergencies with respect to COVID-19.

While vaccines have been approved and are slowly being deployed, the global impact of the outbreak continues to adversely impact many industries and different geographies continue to be impacted by the effects of public health restrictions in various ways.

The International Monetary Fund estimates that the global economy may not return to pre-pandemic levels until the end of 2021 or early 2022 depending on the roll-out and effectiveness of the vaccine.

While vaccines have been approved and are being deployed, the global impact of the outbreak continues to adversely impact many industries and different geographies continue to be impacted by the effects of public health restrictions in various ways.

The International Monetary Fund estimates that aggregate output for advanced economies may return to pre-pandemic trend levels in 2022, whereas output for emerging market and developing economies, excluding China, may remain below the pre-pandemic forecast into 2024.

The timing and likelihood of achieving widespread global vaccination remains uncertain, and the vaccines may be less effective against new variants, potentially leading people to continue to isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time, further delaying the return of the global economy to pre-pandemic levels.

While our fears of a great depression at the onset of the pandemic have not today been realized, the economic recovery is only partially underway, and has been gradual, uneven and characterized by meaningful dispersion across sectors and regions with uncertainty regarding the ultimate length and trajectory.

Further, although many jurisdictions had relaxed or lifted restrictions in an effort to generate more economic activity, the risk of continued COVID-19 outbreaks and new variants remains, and jurisdictions have begun to re-impose restrictions in an effort to mitigate risks to public health, especially as more infectious variants of the virus emerge.

Increasing infection rates and hospitalizations in certain geographies and a potential resulting market downturn has resulted in COVID-19 continuing to impact our business, financial condition, results of operations, liquidity and prospects.

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Some of our investments are in industries that have been materially impacted by the effects of COVID-19 and has resulted, and may continue to result in, material reductions in value in certain instances.

In particular, many portfolio companies in the energy, infrastructure, healthcare, travel, entertainment, hospitality, and retail industries continue to face operational and financial hardships resulting from the spread of COVID-19 and related governmental measures imposed to contain the virus, such as the closure of stores, restrictions on travel, quarantines or stay-at-home orders.

In particular, many portfolio companies in the energy, infrastructure, healthcare, travel, entertainment, hospitality, and retail industries faced, and some continue to face operational and financial hardships resulting from the spread of COVID-19 and related governmental measures imposed to contain the virus, such as the closure of stores, restrictions on travel, quarantines or stay-at-home orders.

If the disruptions caused by the pandemic continue, the businesses of these portfolio companies could suffer materially or become insolvent, which would decrease the value of our funds’ investments and potentially harm our reputation.

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• Operational Risks.

Travel restrictions, the closure of non-essential businesses or shelter-in-place/stay-at-home orders may make it more difficult and costly for our investment teams to conduct due diligence and consummate the acquisition and disposition of investments for our funds.

Our global employee base has generally been working remotely since the start of the pandemic.

This extended period of remote working by our employees may introduce operational risks, including technology availability and heightened cybersecurity risk.

Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that

seek to exploit the COVID-19 pandemic.

Travel restrictions, the closure of non-essential businesses and shelter-in-place/stay-at-home orders have made it more difficult and costly for our investment teams to conduct due diligence and consummate the acquisition and disposition of investments for our funds.

Our global employee base started working remotely at the start of the pandemic and we transitioned to a hybrid model during 2021, subject to local conditions across our global office locations.

Due to the prevalence of highly infectious new variants, we have experienced periods of returning to a fully remote work environment at various times.

This extended period of remote working as well as periods of transition between fully remote and hybrid work models by our employees may introduce operational risks, including technology availability and heightened cybersecurity risk.

Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

In addition, our data security, data privacy, investor reporting and business continuity processes could be impacted by a third party’s inability to perform due to COVID-19 or by failures of, or attacks on, their information systems and technology.

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• Employee-Related Risks.

COVID-19 continues to present a significant threat to our employees’ well-being and morale.

Although our employees have demonstrated their ability to achieve our pre-pandemic levels of productivity while working remotely, COVID-19 continues to present a significant threat to our employees’ well-being and morale.

Our key employees or executive officers may become sick or otherwise unable to perform their duties for an extended period of time and we may experience a potential loss of productivity.

The same could be said of the employees in our portfolio companies, who may not be able to transition to remote work arrangements, as well as our third-party service providers.

In addition, continued office closures could adversely affect our One Carlyle culture.

Although our employees continue to collaborate across offices and geographies, the informal office interactions that contribute to our culture have generally ceased.

The same could happen to the employees in our portfolio companies, as well as our third-party service providers.

In addition, an extended remote work environment could adversely affect our One Carlyle culture.

Our employees continue to collaborate across offices and geographies, but the informal office interactions that contribute to our culture are not as prevalent in a remote work environment and may be lessened even in a hybrid environment due to different employees working in the office on different days of the week.

It is also harder to integrate new employees into the firm in a remote working environment.

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• Taxation Risk as a Result of Mobility Challenges.

As a result of travel restrictions, stay-at-home orders, etc., many of our staff are unable to travel for physical meetings and/or have been displaced working remotely outside of their normal work location.

As a result of travel restrictions, stay-at-home orders and similar measures, many of our staff are unable to travel for physical meetings and/or have been displaced working remotely outside of their normal work location.

This may create taxable presence or residency risks for our corporate entities and professionals as well as our funds and portfolio companies.

Ultimately, these risks could lead to increased levels of taxation and additional compliance complexities.

• Impact of Vaccine .

Although a vaccine has been approved for use, the rollout and success are unknown.

Although our workforce has demonstrated its ability to achieve pre-pandemic levels of productivity on a remote basis, if we were unable to vaccinate our employee base, our work force may be unwilling to return to the office.

In addition to the foregoing, COVID-19 has exacerbated and may continue to exacerbate, many of the other risks described in this Annual Report on Form 10-K.

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 and could increase the cost of such financing if it is obtained, which could lead to lower-yielding investments and could potentially decrease our net income.

A significant contraction in the market for debt financing or other adverse change relating to the terms of debt financing, including higher interest rates and equity requirements and more restrictive covenants, could have a material adverse impact on our business and that of our investment funds and their portfolio companies.

Additionally, the financing of new investments or the operations of our funds’ portfolio companies may become less attractive due to limitations on the deductibility of net interest expense, which under current law is due to become more restrictive beginning with tax year 2022.

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

A significant contraction or weakening in the market for debt financing or other adverse change relating to the terms of debt financing, including higher interest rates and equity requirements and more restrictive covenants, could have a material adverse impact on our business and that of our investment funds and their portfolio companies.

Additionally, in recent years many jurisdictions have introduced (or are considering introducing) new restrictions on the deductibility of interest expense, which could negatively impact the financing of new investments or the operations of our funds’ portfolio companies.

Regulatory changes that constrain banks’ ability to provide debt financing also could have a material adverse impact on our business and that of our investment funds and their portfolio companies.

If our funds are unable to obtain committed debt financing for potential acquisitions or are only able to obtain debt financing at unfavorable interest rates or on unfavorable terms, our funds may have difficulty completing acquisitions that may have otherwise been profitable or if completed, such acquisitions could generate lower than expected profits, both of which could lead to a decrease in our net income.

Additionally, higher interest rates may create downward pressure on the price of real estate, increase the cost and availability of debt financing for the transactions our funds may pursue and decrease the value of fixed-rate debt investments made by our funds.

If our funds are unable to obtain committed debt financing for potential acquisitions or are only able to obtain debt financing at unfavorable interest rates or on unfavorable terms, our funds may have difficulty completing acquisitions that may have otherwise been profitable or if completed, such acquisitions could generate lower than expected profits, each of which could lead to a decrease in our net income.

Further, if our ability to deduct corporate interest expense is substantially limited, our funds may face increased competition from strategic buyers of assets who may have an overall lower cost of capital or the ability to benefit from a higher amount of cost savings following an acquisition, which could also lead to a decrease in our net income.

In addition, rising interest rates, coupled with periods of significant equity and credit market volatility may potentially make it more difficult for us to find attractive opportunities for our funds to exit and realize value from their existing investments.

Any failure by lenders to provide previously committed financing can also expose us to potential claims by sellers of businesses that we may have contracted to purchase.

Our funds’ portfolio companies also regularly utilize the corporate loan and bond markets to obtain financing for their operations.

While credit was available for much of 2020 and new debt issuance hit record levels in some markets, the onset of the COVID-19 crisis exhibited how abruptly credit markets can weaken from exogenous shocks and become unavailable or unattractive for issuers.

In the first and early second quarters of 2020, corporate debt issuance and merger and acquisition activity decreased significantly as market volatility rose and credit spreads widened.

It is possible that during future periods of stress, tightening in the credit markets could render debt financing difficult to obtain, less attractive or more expensive, which may negatively impact the operating performance of our portfolio companies who use debt to fund certain of their operations.

While credit was available for much of 2020 and 2021 and new debt issuance hit record levels in some markets, the onset of the COVID-19 crisis exhibited how abruptly credit markets can weaken from exogenous shocks and become unavailable or unattractive for issuers.

For example, in the first and early second quarters of 2020, corporate debt issuance and merger and acquisition activity decreased significantly as market volatility rose and credit spreads widened.

It is possible that during periods of stress, tightening in the credit markets could render debt financing difficult to obtain, less attractive or more expensive.

To the extent monetary policy, tax or other regulatory changes or difficult credit markets render such financing difficult to obtain or otherwise less attractive, this may negatively impact the operating performance of our portfolio companies that use debt to fund certain of their operations.

This may result in a negative impact on the investment returns of our funds.

In addition, if market conditions make it difficult or impossible to refinance debt that is maturing in the near term, some of our portfolio companies’ operations may be negatively impacted or our portfolio companies may be unable to repay their debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection.

In addition, to the extent that conditions in the credit markets or tax or other regulatory changes make it difficult or impossible for our investments to refinance or extend maturities on their outstanding debt, either on favorable terms or at all, some of our portfolio companies’ operations may be negatively impacted or our portfolio companies may be unable to repay their debt at maturity or interests when due, and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection, any

of which would also likely impair the value of our funds’ portfolio companies and lead to a decrease in investment income earned by us.

Our use of leverage may expose us to substantial risks.

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In addition, the incurrence of additional debt in the future could result in downgrades of our existing corporate credit ratings, which could limit the availability of future financing and/or increase our cost of borrowing.

As borrowings under our credit facility or any other indebtedness mature, we may be required to either refinance them by entering into a new facility or issuing additional debt, which could result in higher borrowing costs, or issuing additional equity, which would dilute existing stockholders.

As borrowings under our credit facility or any other indebtedness mature, we may be required to refinance them by entering into a new facility or issuing additional debt, which could result in higher borrowing costs, or to issue additional equity, which would dilute existing stockholders.

We 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 dividends to our stockholders.

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From time to time we may access the capital markets by issuing debt securities.

For example, in September 2019, we issued $425 million of 3.500% senior notes due 2029 and used the proceeds to redeem our 5.875% Series A Preferred Units.

In September 2018, we issued $350 million aggregate principal amount of 5.650% senior notes due September 2048 and used a portion of the proceeds of the offering to repurchase $250 million in aggregate principal amount of our 3.875% senior notes due February 2023.

Approximately $250 million aggregate principal amount of our 3.875% senior notes due February 2023 remains outstanding.

In March 2013, we issued $400 million aggregate principal amount of 5.625% senior notes due March 2043 and in March 2014, we issued an additional $200 million aggregate principal amount of 5.625% senior notes due March 2048.

We also have a credit agreement that provides a $775 million revolving facility with a final maturity date of February 11, 2024.

In May and June 2021 we issued $500 million aggregate principal amount of 4.625% subordinated notes due May 2061.

We also have senior notes with an aggregate principal amount of $1,375 million as of December 31, 2021 as well as a credit agreement that provides a $775 million revolving facility with a final maturity date of February 11, 2024 (see Note 6 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for more information regarding our senior and subordinated notes and credit agreements).

The credit agreement contains financial and non-financial covenants with which we need to comply to maintain access to this source of liquidity.

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In addition, to the extent we incur additional debt relative to our current level of earnings or experience a decrease in our level of earnings, our credit rating could be adversely impacted, which would increase our interest expense under our credit facility.

In November 2020, Standard & Poor’s and Fitch reaffirmed their “BBB+” stable rating.

Standard & Poor’s and Fitch each reaffirmed their “BBB+” credit rating and revised our rating outlook from stable to positive in October 2021 and November 2021, respectively.

A significant contraction in the market for debt financing or other adverse change relating to the terms of debt financing, including likely higher interest rates from Federal Reserve actions and equity requirements and more restrictive covenants, could have a material adverse impact on our business and that of our investment funds and their portfolio companies.

Beginning January 1, 2022, U.S.

Banks are not allowed to issue any new debt tied to LIBOR.

LIBOR will cease to be published at the end of June 2023.

Though the Alternative Reference Rates Committee formally recommended the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR, there is uncertainty whether there will be universal adoption.

See “—The replacement of LIBOR with an alternative reference rate may adversely affect our credit arrangements and our collateralized loan obligation transactions.”

Our revenue, earnings and cash flow are variable, which makes it difficult for us to achieve steady earnings growth on a quarterly basis.

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For example, our cash flow fluctuates because we receive carried interest from our carry funds only when investments are realized and achieve a certain preferred return.

We may also experience fluctuations in our quarterly and annual results, including our revenue and net income, due to a number of other factors, including changes in the carrying values and performance of our funds’ investments that can result in significant volatility in the carried interest that we have accrued (or as to which we have reversed prior accruals) from period to period, as well as changes in the amount of distributions, gains, dividends or interest paid in respect of investments in our funds and strategic investments (e.g., our investment in Fortitude Re), changes in our operating expenses, the degree to which we encounter competition and general economic and market conditions.

We may also experience fluctuations in our quarterly and annual results, including our revenue and net income, due to a number of other factors, including changes in the carrying values and performance of our funds’ investments that can result in significant volatility in the carried interest that we have accrued (or as to which we have reversed prior accruals) from period to period, as well as changes in the amount of distributions, gains, dividends or interest paid in respect of investments in our funds and strategic investments (e.g., our investment in Fortitude), changes in our operating expenses, the degree to which we encounter competition and general economic and market conditions.

The valuations of investments made by our funds could also be impacted by geopolitical conflict as well as changes, or anticipated changes, in government policy, including policies related to tax reform, financial services regulation, international trade, immigration, environmental, healthcare, labor, infrastructure and energy.

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The carrying value of fund investments, particularly the public portion of our carry fund portfolios, may be more variable during times of market volatility.

As of December 31, 2020, 15% of our Global Private Equity and Global Credit carry fund portfolio was in public securities, which is up materially from December 31, 2019.

As of December 31, 2021, 11% of our Global Private Equity and Global Credit carry fund portfolio was in public securities.

Transaction fees earned in respect of our carry funds can vary from quarter-to-quarter and year-to-year depending on the nature of the investments in any given period.

The recognition of transaction fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by both the pace and size of our carry fund investments.

The recognition of transaction fees can be volatile as they are primarily

generated by investment activity within our funds, and therefore are impacted by both the pace and size of our carry fund investments.

We anticipate a general decline in net transaction fees earned from our carry funds as our recently raised products have generally increased the percentage of transaction fees that are shared with fund investors from 80% to 100%, such that a larger share of the transaction fee revenue we retain is driven by co-investment activity.

In addition, Carlyle Global Capital Markets (GCM) generates capital markets fees in connection with activities related to the underwriting, issuance and placement of debt and equity securities and loan syndication for our portfolio companies and third-party clients.

Capital markets fees generated are typically dependent on transaction frequency and volume, and a slowdown in the pace or size of investments by our carry funds could adversely affect the amount of fees generated by capital markets business.

We are seeking to bolster and

grow our capital markets business, and associated fee stream, related to the underwriting, issuance, and placement of debt and equity securities and loan syndication for our portfolio companies and third-party clients, which if successful will positively impact capital markets fees over time.

We are seeking to bolster and grow our capital markets business, and associated fee stream, related to the underwriting, issuance, and placement of debt and equity securities and loan syndication for our portfolio companies and, to a lesser extent, third-party clients, which we expect if successful will positively impact capital markets fees over time.

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

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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 reporting purposes and the realization and distribution of such carried interest.

However, performance revenues are ultimately realized when (i) an investment is profitably disposed of, (ii) certain costs borne by the limited partner investors have been reimbursed, (iii) the investment fund’s cumulative net returns are in excess of the preferred return and (iv) we have decided to collect carried interest rather than return additional capital to limited partner investors.

However, performance revenues are ultimately realized when an investment is profitably disposed of, certain costs borne by the limited partner investors have been reimbursed, the investment fund’s cumulative net returns are in excess of the preferred return and we have decided to collect carried interest rather than return additional capital to limited partner investors.

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 of time the fund has been in carry, and other qualitative measures.

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In such cases, even when both the predecessor and successor fund have strong performance and earn carried interest, the predecessor fund may substantially exit its investment portfolio before the successor fund is in a sufficient position to begin realizing carried interest.

See “— 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.”

See “—Risks Related to Our Business Operations—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.”

Our fee revenue may also depend on the pace of investment activity in our funds.

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Where appropriate, we may work with our fund investors 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 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 the applicable rate used to calculate management fees may also occur.

For example, prior to raising a successor fund, the South America buyout fund’s original investment period ended in the second half of 2015, resulting in a change from committed capital to invested capital for the management fee base, despite a one-year extension to the investment period.

In addition, we may raise an investment fund and delay the initiation of fees once a fund is raised to better align our management fee inception date to when we are ready to begin investing the fund.

For example, we completed fund raising for the latest Japan fund in summer 2020, but did not charge management fees until October 1, 2020.

While the total amount of management fees collected over the life of a fund would not be impacted, this could result in a delay in receipt of management fees.

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We depend on the efforts, skill, reputations and business contacts of our senior Carlyle professionals, including our Chief Executive Officer, Kewsong Lee, and other key personnel, including members of the investment committees of our investment funds and senior members of our investment teams, the information and deal flow they and others generate during the normal course of their activities and the synergies among the diverse fields of expertise and knowledge held by our professionals.

On September 30, 2020, Glenn Youngkin retired from the firm and Mr.

Lee became our sole Chief Executive Officer.

Conway and Rubenstein continue to serve as Co-Chairmen and Mr.

D’Aniello serves as Chairman Emeritus.

Although our founders remain committed to our business and serve on various investment committees, in these roles, they are not executive officers and no longer have responsibility for the day-to-day operations of the firm and may choose to pursue philanthropic or other personal endeavors, including personal investment activities, in addition to their roles at Carlyle.

Our founders and other key personnel are not obligated to remain employed with us in their current capacities or at all.

We entered into an employment agreement with Mr.

Lee in October 2017, which was amended in connection with our Conversion in January 2020, and which will expire pursuant to its terms, unless earlier terminated, on December 31, 2022, unless extended or new arrangements are agreed.

Our Chief Executive Officer and other key personnel are not obligated to remain employed with us in their current capacities or at all.

To continue to enhance our talent base, we have and will continue to hire and internally develop senior professionals to assume key leadership positions throughout the firm into the future.

The efficacy of such future leadership may constitute an adverse risk to our business.

In October 2017, we entered into an employment agreement with Mr.

Lee, which was amended in connection with our Conversion in January 2020.

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 our key personnel 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.

The governing agreements of many of our investment funds generally require investors in those funds to vote to continue the investment period in the event that certain “key persons” in our investment funds do not provide the specified time commitment to the fund or our firm ceases to control the general partner.

We have historically relied in part on the interests of these professionals in the investment funds’ carried interest and incentive fees to discourage them from leaving the firm.

However, to the extent our investment funds perform poorly, thereby reducing the potential for carried interest and incentive fees, their interests in carried interest and incentive fees become less valuable to them and may become a less effective retention tool.

The availability and efficacy of such future leadership may constitute an adverse risk to our business.

While our founders Messrs.

Conway and Rubenstein continue to serve as Co-Chairmen of our Board and Mr.

D’Aniello serves as Chairman Emeritus and each remains committed to our business and in certain cases serve on various investment committees, in these roles, they are not executive officers and no longer have responsibility for the day-to-day operations of the firm and may choose to pursue philanthropic or other personal endeavors, including personal investment activities, in addition to their roles at Carlyle.

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.

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

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 Carlyle professionals and other professionals we employ.

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.

The market for qualified investment professionals is extremely competitive and we may not be successful in our efforts to recruit, retain and motivate these professionals.

In addition, if there is a shift to remote work options that do not require relocation or maintaining close proximity to a company’s offices as a result of the impact of the COVID-19 pandemic, we may experience an increase in competition for talent and it may be difficult to recruit and retain our professionals.

There are also certain factors that are not within our control that may affect our efforts to recruit, retain and motivate investment professionals, in particular as it relates to tax considerations regarding carried interest.

For example, if the U.S.

Congress or state, local or certain foreign governments enacted legislation to treat carried interest as ordinary income rather than as capital gain for tax purposes or impose a surcharge on carried interest, this could result in a material increase in the amount of taxes that our carry recipients would be required to pay, which would in turn affect our ability to recruit, retain and motivate our current and future professionals.

tax reform legislation, informally known as the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017 (the “TCJA”), includes a provision that changes the treatment of carried interest with respect to an applicable partnership interest from long-term capital gains to short-term capital gains (taxable at ordinary income rates) to the extent such gains relate to property with a holding period not greater than three years.

The Internal Revenue Service released final regulations on January 7, 2021, which clarified the scope and applicability of such longer holding period requirement.

The final regulations apply to taxable years beginning on or after January 19, 2021, which means that for most partnerships they will only apply to taxable years beginning in 2022, unless the partnership elects to apply them sooner.

While most proposals regarding the taxation of carried interest still require realization of gains before applying ordinary income rates, legislation has previously been introduced that would assume a deemed annual return on carried interest and tax that amount annually, with a true-up once the assets are sold.

The new Congress may consider a proposal that would require certain taxpayers to pay capital gains taxes on the appreciated value of their public investments annually.

This could result in the payment of tax prior to the realization of any cash receipts.

Any tax on private assets would be deferred until a sale, but at undetermined higher rates than current law.

The new Congress may also consider proposals to increase the capital gains tax rate.

In addition, the tax treatment of carried interest may continue to be an area of focus for policymakers and government officials, which could result in further regulatory action by federal or state governments.

For example, certain states have proposed legislation to levy additional state tax on carried interest, which may also negatively affect our ability to attract and retain professionals.

The TCJA also includes a provision that limits U.S.

tax deductions for certain amounts of publicly traded corporations’ executive compensation expense.

We are seeing similar policy discussions in respect of the appropriate treatment of carried interest in many of the international jurisdictions in which we have investment professionals.

For example, the UK Office of Tax Simplification is currently undertaking a review of the UK Capital Gains Tax Regime and there is a risk that this review could prompt a change to the ultimate taxation of carried interest by our UK investment professionals.

The additional pressures of fiscal deficits created as a result of the COVID-19 pandemic has heightened these risks as international authorities consider ways to increase tax revenues.

These types of developments might make it more difficult for us to incentivize, recruit and retain investment professionals, which may have an adverse effect on our ability to achieve our investment objectives.

In addition, the after-tax income and gain related to our business, our distributions to stockholders and the market price of our shares, all could be reduced.

Recruiting and retaining our professionals has become more difficult and may continue to be difficult in the future, which could adversely affect our business, results of operations and financial condition.

Our most important asset is our people, and our continued success is highly dependent upon the efforts of our senior Carlyle professionals and other employees.

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

The market for qualified professionals is extremely competitive across levels and areas of expertise, and we may not be successful in our efforts to recruit, retain and motivate these professionals.

In connection with the COVID-19 pandemic, there has been a shift to a hybrid work model and, in our recruiting efforts, we have seen increased focus by prospective candidates on remote and hybrid work arrangements and arrangements providing more flexibility, including around location.

If there is a further shift to a longer-term fully remote model that does not require maintaining close proximity to a company’s offices in the markets in which we compete for talent, we may experience an even further increase in competition for talent and it may be difficult to recruit and retain our professionals.

We have also experienced upward pressure on compensation packages given the increased competition to hire and retain talented personnel, and we may be required to adjust the amount of cash compensation and types, terms and amounts of equity incentives we provide to our employees, which could have positive or negative effects on the financial metrics commonly used to measure our performance.

Even when we offer top-of-market compensation packages, we may not be able to attract and retain all of our desired personnel due to shifting employee priorities.

For our investment professionals, we have historically relied in part on their interests in our investment funds’ carried interest and incentive fees to discourage them from leaving the firm.

However, to the extent our investment funds perform

poorly, thereby reducing the potential for carried interest and incentive fees, those interests become less valuable to them and may become a less effective retention tool.

There are also factors beyond our control that may affect our efforts to recruit, retain and motivate investment professionals, in particular as they relate to tax considerations regarding carried interest.

The tax treatment of carried interest has been an area of focus for policymakers and government officials in recent years.

For example, the Tax Cuts and Jobs Act (the “TCJA”) enacted in 2017 generally requires that carried interest satisfy a more-than-three-year holding period (as opposed to a more-than-one-year holding period under prior law) to qualify as long-term capital gain that is taxed at preferential rates for individuals.

Congress and the current Administration may consider proposals to treat carried interest as ordinary income rather than as capital gain for tax purposes, to impose a surcharge on carried interest, to further extend the holding period for carried interest to qualify for long-term capital gain treatment, or to increase the capital gains tax rate, each of which could result in a material increase in the amount of taxes that our carry participants would be required to pay.

While most proposals regarding the taxation of carried interest require realization of gains before applying ordinary income rates, U.S.

federal legislation has been introduced that would require holders of carried interest to recognize a specified amount of deemed compensation income each year regardless of whether the investment partnership recognizes income or gain and regardless of whether and when the holders receive distributions in respect of their carried interests.

If the tax treatment of carried interest continues to be an area of focus for policymakers and government officials, it could result in further regulatory action by federal, state, or non-U.S.

For example, certain states, including New York and California, have proposed legislation to levy additional state tax on carried interest.

We have seen similar policy discussions in respect of the appropriate treatment of carried interest in many of the international jurisdictions in which we have investment professionals.

The additional pressures of fiscal deficits created as a result of the COVID-19 pandemic have heightened these risks as international authorities consider ways to increase tax revenues.

Such legislative and regulatory changes that modify the tax treatment of carried interest could make it more difficult for us to incentivize, recruit and retain investment professionals, which may have an adverse effect on our ability to achieve our investment objectives and thereby reduce the after-tax income and gain related to our business, our distributions to stockholders and the market price of our shares.

We have granted and expect to grant equity awards from our Equity Incentive Plan, which has caused dilution.

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The value of our common stock may drop in value or be volatile, which may make our equity less attractive to our employees since we may not be able to adequately incentivize them.

As of December 31, 2020, our employees held an aggregate of 8.5 million unvested restricted stock units, which vest over various time periods, generally from six months to four years from the date of grant.

As of December 31, 2021, our employees held an aggregate of 14.8 million unvested restricted stock units, which vest over various time periods (generally from six months to four years from the date of grant) and/or subject to the achievement of various performance targets.

All of the shares of common stock held by our founders are fully vested.

In order to recruit and retain existing and future senior Carlyle professionals and other key personnel, we may need to increase the level of compensation that we pay to them.

In order to recruit and retain existing and future senior Carlyle professionals and other key personnel, we may need to increase the level of compensation that we pay to them, which could include grants of significant amounts of restricted stock awards under our Equity Incentive Program.

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.

For example, in February 2021, we granted 6.6 million strategic restricted stock units to certain senior Carlyle professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, which will increase our equity based compensation expense in the coming years.

Under the new program, at Carlyle’s discretion, up to 20% of a carry participant’s realized proceeds over a threshold amount may be paid by issuing fully vested new shares of our common stock.

Over the first two years of the program, which we anticipate will commence during the second or third quarter of 2021, up to $100 million in common shares may be issued in lieu of paying carried interest distributions all in cash.

This program will not impact our equity based compensation expense.

For example, in 2021, we granted 7.1 million restricted stock units to certain senior Carlyle professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, which will increase our equity-based compensation expense in the coming years.

Additionally, in February 2021, in order to further foster the alignment of our carry participants, in particular our senior investment professionals, with our stockholders, the Compensation Committee approved a new program whereby, at Carlyle’s discretion, up to 20% of a carry participant’s realized proceeds over a threshold amount may be distributed in fully vested, new shares of our common stock under our Equity Incentive Plan.

Over the first two years of the program, which commenced during the fourth quarter of 2021, up to $100 million in common shares may be issued in lieu of distributing carried interest all in cash.

This program will not result in incremental compensation expense.

The issuance of equity interests in our business in the future to our senior Carlyle professionals and other personnel would also dilute our stockholders.

We strive to maintain our culture of collaboration and seek to continue to align our interests (and the interests of our employees) with those of our investors.

If we do not continue to develop and implement the right processes and tools to

maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations.

If we do not continue to develop and implement the right processes and tools to maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations.

Given our focus on achieving superior investment performance and maintaining and strengthening investor relations, we may reduce our AUM, restrain its growth, reduce our fees or otherwise alter the terms under which we do business when we deem it in the best interest of our investors—even in circumstances where such actions might be contrary to the near-term interests of stockholders.

From time to time if we decide it is in the best interests of all stakeholders, we may take actions that could reduce the profits we could otherwise realize in the short term.

From time to time if we decide it is in the best interests of stakeholders, we may take actions that could reduce the profits we could otherwise realize in the short term.

While we believe that our commitment to treating our investors fairly is in the long-term interest of us and our stockholders, our stockholders should understand we may take actions that could adversely impact our short-term profitability, and there is no guarantee that such actions will benefit us in the long term.

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We may receive requests to reduce management fees on other funds in the future.

“—See Risks Related to Our Business—Our investors may negotiate to pay us lower management fees and the economic terms of our future funds may be less favorable to us than those of our existing funds, which could adversely affect our revenues.”

Many of our investment funds utilize subscription lines of credit to fund investments prior to the receipt of capital contributions from the fund’s investors.

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Any such delay could result in a deferral of realized carried interest to a subsequent period.

See “ — Risks Related to Our Company — Our revenue, earnings and cash flow are variable, which makes it difficult for us to achieve steady earnings growth on a quarterly basis.”

See “—Our revenue, earnings and cash flow are variable, which makes it difficult for us to achieve steady earnings growth on a quarterly basis.”

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.

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• our ability to identify and manage risks in new lines of businesses;

• our ability to implement and maintain adequate investment processes, controls and procedures around our platforms;

• our ability to obtain requisite approvals and licenses from the relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs and delays;

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Our ability to consummate an acquisition 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 a firm acquisition will be affected by, among other things:

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 delays or incur unexpected costs.

In addition to the concerns noted above, each individual acquisition transaction presents unique challenges to ultimately be successful and the success of a firm acquisition will be affected by, among other things:

• difficulties and costs associated with the integration of operations and systems;

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• the risk that a change in ownership will negatively impact the relationship between an acquiree and the investors in its investment vehicles.

Each acquisition transaction presents unique challenges.

For example, in December 2018 we acquired 100% of Apollo Aviation Group, a global commercial aviation investment and servicing firm with total assets under management of $5.8 billion, and over 80 employees and offices in the United States, Ireland and Singapore.

We renamed Apollo Aviation Group to Carlyle Aviation Partners at the time of our acquisition.

Our investment in Carlyle Aviation Partners faces the risk that we do not successfully integrate the business into our Global Credit segment.

In addition, if a new product, business or venture developed internally or by acquisition is unsuccessful, we may decide to wind down, liquidate and/or discontinue it.

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• the disruption of our ongoing business;

• the increasing demands on or issues related to the combination or integration of operational and management systems and controls;

• how our existing fund investors view any new initiatives;

• the increasing demands on or issues related to the combination or integration of operational and management systems and controls, including related securities systems, and infrastructure;

• compliance with or applicability to our business or our portfolio companies of regulations and laws, including, in particular, local regulations and laws (for example, consumer protection related laws) and customs in the numerous global jurisdictions in which we operate and the impact that noncompliance or even perceived noncompliance could have on us and our portfolio companies;

• our ability to achieve expected results or realize expected synergies from our investments;

• a potential increase in investor concentration;

• the broadening of our geographic footprint, including the risks associated with conducting operations in certain foreign jurisdictions where we currently have no presence.

• the broadening of our geographic footprint, including the risks associated with conducting operations in certain foreign jurisdictions where we currently have no presence (including regulatory, tax, legal, and reputational consequences).

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, litigation, regulatory risk and expense.

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There can be no assurances that any joint venture opportunities will be successful.

In November 2019, we signed an agreement for an investment fund advised by us to acquire an additional interest in Fortitude Re and closed on this acquisition in June 2020.

We and our fund investors now own 71.5% of Fortitude Holdings (including our previously acquired 19.9% interest in the company).

In addition to the risks noted above, if Fortitude Re is unable to successfully operate independently or our management of any real or perceived conflicts of interest that may arise in implementing Fortitude Re’s asset management strategy may adversely impact our investment in the company and our future growth plans for the business and may not allow us to realize the strategic rationale for investing in the company.

Proposed changes in U.S.

and foreign taxation of businesses could adversely affect us.

Congress, the OECD, the European Commission and other government agencies in jurisdictions where we and our affiliates invest or do business have maintained a focus on issues related to the taxation of multinational corporations.

The OECD, which represents a coalition of member countries, released the Base Erosion and Profit Shifting (“BEPS”) package in October 2015.

Individual jurisdictions have begun to introduce domestic legislation implementing certain of the BEPS actions, including measures covering treaty abuse, the deductibility of interest expense, local nexus requirements, transfer pricing and hybrid mismatch arrangements, which are potentially relevant to some of our structures and could have an adverse tax impact on us, our funds, investors and/or our portfolio companies.

In particular, there remains significant uncertainty as to the continued availability of the protections afforded by double tax treaties and/or EU Directives to mitigate cross boarder frictional taxes and the loss of such protections would lead to increased taxes on income from our investments.

This position is likely to remain uncertain for a number of years.

In addition, press speculation and heightened focus on the structures commonly used in the private equity industry in general, whether or not valid, may harm our reputation which may ultimately be damaging to our business.

In addition, in July 2016, the European Council took steps to implement the BEPS Project actions points within EU law through the adoption of the Anti-Tax Avoidance Directive (EU) 2016/1164 (commonly referred to as “ATAD I).

On May 29, 2017, the European Council formally amended the ATAD I directive to increase the scope of the hybrid mismatches pillar to also apply to arrangements with third countries outside of the EU (commonly referred to as “ATAD II”).

ATAD II came into force in EU Member States on 1 January 2020 (subject to relevant derogations).

The rules within ATAD I and II are extensive, complex and could apply to a wide range of scenarios.

We are also still waiting for the issuance of guidance from several countries.

These rules could have an adverse tax impact on our firm, funds, investors and/or our portfolio companies.

A new mandatory automatic exchange of information regime has been implemented under Council Directive 2011/16/EU on administrative co-operation in the field of taxation (as amended) (the “Directive on Administrative Co-Operation” or the “DAC”).

The DAC, a directive under the EU Mandatory Disclosure Rules (“MDR”), took effect from June 25, 2018, and requires ‘intermediaries’ (as defined and which includes advisers), or in some cases taxpayers, to report information to EU tax authorities about cross-border arrangements that contain certain prescribed hallmarks.

Under the DAC, certain information will be automatically exchanged among EU tax Member States.

This will likely create additional costs and administrative burdens and penalties could be imposed for failure to adequately provide such disclosure in a timely manner.

A number of European jurisdictions have enacted taxes on financial transactions, and the European Commission has proposed legislation to harmonize these taxes under the so-called “enhanced cooperation procedure,” which provides for adoption of EU-level legislation applicable to some but not all EU Member States.

If adopted by individual countries, this could potentially increase tax uncertainty and/or costs faced by us, our funds’ portfolio companies and our investors, change our business model and cause other adverse consequences.

Following a mandate by G20 Finance Ministers in March 2017 to address tax challenges arising from the digitalization of the economy, the OECD continues to pursue a multilateral agreement on so-called Pillar One and Pillar Two of the Inclusive Framework on BEPS, in an effort to prevent the proliferation of unilateral, discriminatory taxes on multi-national enterprises (“MNEs”), such as digital services taxes (“DSTs”) recently adopted by France and other countries.

Pillar One focuses on the allocation of taxing rights to different jurisdictions and seeks to undertake a coherent and concurrent review of the profit allocation and nexus rules.

Pillar Two calls for the development of a coordinated set of rules to address ongoing risks from structures that allow MNEs to shift profit to jurisdictions where they are subject to no or low taxation.

Negotiations are underway at the OECD level to coordinate and recommend Pillar One and Pillar Two as alternatives to various country specific legislation, such as the DST.

If country-specific DST were to be adopted, they could impact the value of investments or create additional administrative burdens and costs on the organization.

The OECD’s stated goal was to have an agreement by the end of 2020 and this has now been extended to the middle of 2021.

The OECD, G20 and its members of the inclusive framework are still working to reach political and technical consensus by this date, for either Pillar separately or combined.

Such an agreement would substantially require participating countries to implement national legislation, as well as comprehensive revision of existing bilateral tax treaties.

The Netherlands continued to provide additional updates to its withholding tax on dividends.

Following EU case law, three safe harbor rules currently embedded in domestic anti-abuse rules as part of the Dividend Withholding Tax Act and the Corporate Income Tax Act will no longer function as a safe harbor rule.

In addition, the Dutch political party “GroenLinks” has indicated they will issue a legislative proposal to amend the Dividend Withholding Tax Act.

Currently, there is no draft bill, nor is it indicated when the draft bill will be presented to parliament.

If the bill is accepted, the date of entry into force would be subject to discussion.

We are evaluating and monitoring the impact of these changes which could result in additional withholding on certain payments for us and our investment funds.

The TCJA included a minimum tax at a current rate of 10.5% on global intangible low taxed income (“GILTI”), which is the income earned by foreign affiliates of US companies from intangible assets.

The new Administration proposes to increase such rate on foreign income to 21% and replace the current aggregate approach with a separate calculation for each country, which could result in an increase in US taxable income.

In addition, the new Administration may pursue tax policies seeking to limit further the deductibility of interest.

Any such tax changes could materially increase the amount of taxes we, our portfolio companies, our investors, or our employees and other key personnel would be required to pay.

Operational risks, including those associated with our business model, may disrupt our businesses, result in losses or limit our growth.

We and our fund investors hold a 71.5% controlling interest in Fortitude, inclusive our 19.9% interest.

In addition to the risks noted above, if Fortitude is unable to successfully operate independently, or any real or perceived conflicts of interest arise in implementing Fortitude’s asset management strategy, it may adversely impact our investment in the company and our future growth plans for the business and may not allow us to realize the strategic rationale for investing in the company.

Operational risks (including those associated with our business model), system security risks, breaches of data protection, cyberattacks or actions or failure to act by our employees or others with authorized access to our networks 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 global investment management firm, we hold a significant amount of confidential and sensitive information about our investors, our portfolio companies and potential investments.

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

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

These security threats could originate from a wide variety of sources, including unknown third parties outside the company and current and past employees and contractors who have or had access to our facilities, systems and information (“insider risk”).

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 a global investment management firm, we hold a significant amount of confidential and sensitive information about our investors, our portfolio companies and potential investments.

As a result, we may face a heightened risk of a security breach, online extortion attempt, or disruption with respect to this information resulting from an attack by a variety of bad actors, including computer hackers, foreign governments, cyber extortionists 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 damage to our reputation.

Our suppliers, contractors, investors, and other third parties with whom we do business also experience cyber threats and attacks that are similar in frequency and sophistication.

These supply chain attacks are increasing in frequency and impact on the businesses they affect.

In many cases, we have to rely on the controls and safeguards put in place by our suppliers, contractors, investors and other third parties to defend against, respond to, and report these attacks.

Because employees and contractors (and their family and household members) may introduce vulnerabilities in our systems if they are the target of “phishing,” social engineering, bribery, coercion or other attacks through the firm’s email systems, we have implemented a security awareness training program.

The objective of this program is to inform Carlyle personnel of their responsibility for information security and includes quarterly online training, live awareness events and phishing simulations.

Because those with authorized access to our networks, including employees and contractors may introduce vulnerabilities in our systems if they are the target of “phishing,” social engineering, bribery, coercion or other attacks through the firm’s systems, we have implemented a security awareness training program.

The objective of this program is to inform Carlyle personnel and contractors of their responsibility for information security and includes quarterly online training, live awareness events and phishing simulations.

We cannot know the potential impact of future cyber incidents, which vary widely in severity and scale.

There can be no assurance that the various procedures and controls we utilize to mitigate these threats will be sufficient to prevent disruptions

to our systems, especially because the cyber-attack techniques used change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources.

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 investors, regulatory intervention or reputational damage.

There can be no assurance that the various procedures and controls we utilize to mitigate these threats will be sufficient to prevent disruptions to our systems, especially because the cyber-attack techniques used change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources.

If any of these controls do not operate properly or are disabled for any reason or if there is any unauthorized disclosure of data, whether as a result of tampering, a breach of our network security systems, a cyber-incident or attack or otherwise, we could suffer substantial financial loss, increased costs, a disruption of our businesses, liability to our funds and investors, regulatory 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.

Significant security incidents at competitor global investment firms in which we are not directly impacted could indirectly lead to increased costs from investor due diligence and more extensive and/or frequent regulator inspections.

Cyber security is a top priority for regulators around the world, including the SEC’s Office of Compliance Inspections and Examinations (OCIE).

In its examination programs, OCIE has prioritized cyber security with an emphasis on, among other things, proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security.

In addition, many jurisdictions in which we operate have laws and regulations relating to data privacy, cyber security and protection of personal information, including the General Data Protection Regulation (“GDPR”) in the EU and U.S.

state laws such as the California Consumer Privacy Act (“CCPA”) that took effect in January 2020, which provides for enhanced consumer protections for California residents, a private right of action for data breaches and statutory fines for data breaches and other CCPA violations.

If we fail to comply with the relevant laws and regulations, it could result in regulatory investigations and penalties, which could lead to negative publicity and may cause our investors to lose confidence in the effectiveness of our security measures.

Significant security incidents at competitor global investment firms in which we are not directly impacted could indirectly lead to increased costs from investor due diligence, revisions to insurance premiums and more extensive and/or frequent regulator inspections.

Our information systems and technology may not continue to be able to accommodate our growth, and the cost of maintaining such systems may increase from its current level.

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A failure to accommodate growth, or an increase in costs related to such information systems, could have a material adverse effect on us.

In addition, we rely on third-party service providers for certain aspects of our business, including for certain information systems and technology and administration of our business development companies, structured credit funds and Investment Solutions segment.

For example, Carlyle contracts information system backup and recovery services to a portfolio company.

These third-party service providers could also face ongoing cyber security threats and as a result unauthorized individuals could improperly gain access to our confidential data.

These third-party service providers could also face ongoing cybersecurity threats and as a result unauthorized individuals could improperly gain access to our confidential data.

Any interruption or deterioration in the performance of these third parties or failures of their information systems and technology could impair the quality of the funds’ operations and could affect our reputation and hence adversely affect our businesses.

Our technology, data and intellectual property and the technology, data and intellectual property of our portfolio companies are also subject to a heightened risk of theft or compromise to the extent we and our portfolio companies engage in operations outside the United States, particularly in those jurisdictions that do not have comparable levels of protection of proprietary information and assets such as intellectual property, trademarks, trade secrets, know-how and customer information and records.

Our technology, data and intellectual property and the technology, data and intellectual property of our portfolio companies are also subject to a heightened risk of theft, disruption or compromise to the extent we and our portfolio companies engage in operations outside the United States, particularly in those jurisdictions that do not have comparable levels of protection of proprietary information and intangible assets, such as intellectual property and customer information and records.

In addition, we and our portfolio companies may be required to compromise protections or forgo rights to technology, data and intellectual property in order to operate in or access markets in a foreign jurisdiction.

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However, our global employee base services the needs of our investment funds and investors out of 26 offices around the world.

As our business needs evolve, including as part of trends toward remote work, and/or in order to reduce expenses, we may close 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.

Furthermore, a restructuring of our corporate real estate that results in the closure of one or more offices could result in significant charges and other costs incurred by us.

For example, we are seeking to consolidate our New York City locations into one office located at One Vanderbilt, of which we took occupancy at the end of 2020.

Closures or subleasing of existing office space in the future may result in our operating results being adversely impacted.

As our business needs evolve, we may be required to expand our office space, which could increase our rent expense.

Alternatively, as part of trends toward remote and hybrid work develop, and/or in order to reduce expenses, we may close offices, and a restructuring of our corporate real estate that results in the closure or subleasing of one or more offices could result in charges and other costs incurred by us.

Additionally, we may 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 material adverse impact on our ability to continue to operate our business without interruption.

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For example, systematic risks such as a massive and prolonged global failure of Amazon or Microsoft’s cloud services could result in cascading catastrophic systems failures.

We may also need to commit additional management, operational and financial

resources to identify new professionals to join our firm and to maintain appropriate operational and financial systems to adequately support expansion.

The market for hiring talented professionals, including IT professionals, is competitive and we may not be able to grow at the pace we desire.

We may also need to commit additional management, operational and financial resources to identify new professionals to join our firm and to maintain appropriate operational and financial systems to adequately support expansion.

The market for hiring talented professionals, including IT and cybersecurity professionals, is competitive and we may not be able to grow at the pace we desire.

In addition, we, and our portfolio companies, may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage levels against potential liabilities we may face in connection with potential claims, which could have a material adverse effect on our business.

We may face a risk of loss from a variety of claims, including related to securities, antitrust, contracts, fraud, business interruption and various other potential claims, whether or not such claims are valid.

We may face a risk of loss from a variety of claims, including related to securities, antitrust, contracts, cyber incidents, fraud, business interruption and various other potential claims, whether or not such claims are valid.

Insurance and other safeguards might only partially reimburse us for our losses, if at all, and if a claim is successful and exceeds or is not covered by our insurance policies, we may be required to pay a substantial amount in respect of such successful claim.

Because of market conditions, premiums and deductibles for certain insurance policies, particularly D&O and property insurance, have increased substantially and may increase further, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage.

Because of market conditions, premiums and deductibles for certain insurance policies, particularly D&O, cyber and property insurance, have increased substantially and may increase further, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage.

Additionally, the dollar amount of claims and/or the number of claims we experience may also increase at any time, which may have the result of further increasing our costs.

Certain losses of a catastrophic nature, such as wars, earthquakes, typhoons, pandemics, terrorist attacks or other similar events, may be uninsurable or may only be insurable at rates that are so high that maintaining coverage would cause an adverse impact on our business, our investment funds and their portfolio companies.

Losses related to the COVID-19 pandemic have generally been excluded under most business property insurance properties and business interruption policies and going forward will not be covered under new policies.

Losses related to the COVID-19 pandemic have generally been excluded under most business property insurance policies and business interruption policies and going forward will not be covered under new policies.

In general, losses related to terrorism are becoming harder and more expensive to insure against.

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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.

For example, in 2020 Carlyle was targeted in an unsuccessful multi-week botnet-sourced password guessing attack.

In addition, we and our employees may be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or sensitive information.

For example, we could be the target of wire transfer fraud whereby a third party seeks to benefit from misrepresenting an employee or fund investor by improperly authorizing a wire transfer or change in wire instructions.

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.S.

Although we take various measures and have made, and will continue to make, significant investments to ensure the integrity of our systems and to safeguard against such failures or security breaches, including mechanisms for governance, strategy and risk management, there can be no assurance that these measures and investments will provide protection.

The COVID-19 pandemic has exacerbated these risks due to heavier reliance on online communication and the remote or partially remote working environment, which may be less secure, and there has been a significant increase in hacking attempts by cyber-criminals.

In 2021, Carlyle responded to several large-scale phishing attacks, resulting in no harm to Carlyle assets.

In addition, we and our employees have been and expect to continue to be the target of fraudulent calls and emails, the subject of impersonations and fraudulent requests for money, including attempts to redirect material payment amounts to fraudulent bank accounts, and other forms of spam attacks, phishing or other social engineering, supply chain attacks, ransomware or other events.

In addition, we have been, and could in the future be, the target of a type of wire transfer fraud known as business email compromise where a third party seeks to benefit from misrepresenting an employee or fund investor by improperly authorizing a wire transfer or change in wire instructions.

While our policies and procedures have been effective against this fraud to date, a significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of investor, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, 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.S.

federal and state governments, the EU or other jurisdictions or by various regulatory organizations or exchanges.

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.

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.

Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security worldwide may limit the use and adoption of our services and adversely affect our business.

Cybersecurity is a top priority for regulators around the world.

As a result, we are subject to a variety of federal, state, local, and international laws, directives, and regulations, as well as contractual obligations, relating to the collection, use, retention, security, disclosure, transfer, and other processing of personal information and other sensitive data.

The legal framework for privacy, data protection, and data transfers worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

In some cases, federal regulators have been focusing on cybersecurity as an area of concern for several years.

For example, in guidance from the SEC since at least 2011, cybersecurity has been raised as an area where companies, which would include global investment firms, must disclose both threats to the company and material cyber events that have been experienced by that company.

In at least cases from the latter half of 2021, the SEC brought enforcement actions against registered companies that failed to report such cyber events.

We expect increasing SEC enforcement activity related to cybersecurity matters, including by the SEC’s Office of Compliance Inspections and Examinations (OCIE) in its examination programs, where cybersecurity has been prioritized with an emphasis on, among other things, proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security.

Further, the SEC has indicated in recent remarks that areas of focus for potential new policies and initiatives could include cyber hygiene and preparedness, cyber incident reporting to the government and, in certain circumstances disclosure to the public.

Although we maintain cybersecurity controls designed to prevent cyber incidents from occurring, no security is perfect and not all cyberattacks can be detected or stopped.

It is possible that current and future cyber enforcement activity will target practices that we believe are compliant but were not necessarily deemed to be by the SEC.

In addition, many jurisdictions in which we operate have other laws and regulations relating to data privacy, cybersecurity, data transfers, data localization and protection of personal information.

In the European Economic Area (“EEA”), the General Data Protection Regulation (“GDPR”) establishes requirements applicable to the processing of personal data, affords new data protection rights to individuals, and imposes penalties for serious data breaches.

Additionally, Brexit took effect in January 2020, which will lead to further legislative changes and reduces

clarity as to whether data transfer to the United Kingdom will remain lawful in the long term.

We may also need to make use of alternative data transfer mechanisms such as standard contractual clauses approved by the European Commission, or the SCCs.

On June 4, 2021, the European Commission adopted new SCCs under the GDPR for personal data transfers outside the EEA, which may require us to expend significant resources to update our contractual arrangements and to comply with such obligations.

Further, data protection authorities may require measures to be put in place in addition to SCCs for transfers to countries outside of the EEA.

Our third-party service providers may also be affected by these changes.

In addition to other impacts, we may experience additional costs to comply with these changes, and we and our customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the United States and other non-EEA countries.

We cannot fully predict how the GDPR, the UK GDPR, and other data protection laws or regulations may develop in the medium to longer term nor the effects of divergent laws and guidance regarding how data transfers to and from the UK will be regulated.

Further, China strengthened the protection of personal information and tightened control over cross-border data transfer with the enactment of the Data Security Law (the “DSL”) (effective from September 1, 2021) and the Personal Information Protection Law (the “PIPL”) (effective from November 1, 2021).

Both laws may affect the business of Carlyle and our portfolio companies in the following ways.

Firstly, when conducting business and processing personal information or other data in China, Carlyle and our portfolio companies are obliged to comply with the processing rules and security obligations prescribed by the DSL and PIPL.

Secondly, both laws may apply extra-territorially to the processing of personal information and other data relating to China conducted by Carlyle or our portfolio companies outside of China.

Thirdly, both laws regulate cross-border data transfer conducted by Carlyle and our portfolio companies.

The PIPL imposes several conditions for cross-border transfer of personal information (e.g., separate consent from data subjects, governmental security review and approval in certain circumstances), while the DSL restricts transfer of “important data” outside of China.

The exact scope of “important data” remains unclear but may include certain data collected and/or generated by Carlyle and our portfolio companies in China.

Lastly, Carlyle and our portfolio companies may be contractually bound by certain data compliance obligations when dealing with counterparties in China as a result of the DSL and the PIPL.

In addition to the PIPL and the DSL, China passed its first Cybersecurity Law (the “CSL”) in 2016.

The CSL is the first PRC law to specify regulatory requirements on cybersecurity and data protection applicable to online activities that had not, in the past, been regulated.

Violations of the CSL include a variety of penalties, including warnings, surrender of illegal income, suspension of business activities, winding up, shutting down websites, and revocation of business license or relevant permits.

More recently, China passed two cybersecurity laws that could affect our business.

First, the DSL specifies obligations for entities and individuals handling personal data, including that acquisition of personal data cannot be via illegal means, and the collection and use of personal data cannot exceed necessary limits.

Second, the National Intelligence Law (“NIL”) allows authorities to request organizations and citizens to provide necessary support, assistance, and cooperation to the government.

The law provides broad police power, including the ability for intelligence officials to enter relevant restricted areas and venues, learn from and question relevant organizations, and collect relevant files, materials or items.

The costs of compliance with, and other burdens imposed by the PIPL, CSL, DSL and NIL, along with any other cybersecurity and related laws in China, could have an adverse impact on our business and increase our compliance burden.

The lack of clarity and regulatory guidance on some issues adds to the compliance risks.

Any inability, or perceived inability, to adequately address privacy and data protection concerns, or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations could result in additional cost and liability and could damage our reputation and adversely affect our business.

Many other foreign countries and governmental bodies in other relevant jurisdictions where Carlyle and our portfolio companies conduct business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdiction that are more restrictive than those in the U.S.

For example, the Hong Kong Personal Data (Privacy) Ordinance, the Australian Privacy Act, and the Brazilian Bank Secrecy Law.

Global laws in this area are rapidly increasing in the scale and depth of their requirements, and are also often extra-territorial in nature.

In addition, a wide range of regulators are seeking to enforce these laws across regions and borders.

Furthermore, we frequently have privacy compliance requirements as a result of our contractual obligations with counterparties.

These legal and contractual obligations heighten our privacy obligations in the ordinary course of conducting our business in the U.S.

and internationally.

In the U.S., new state laws are being passed, such as the California Consumer Privacy Act (“CCPA”) which took effect in January 2020 and provides for enhanced consumer protections for California residents, a private right of action for data breaches and statutory fines for data breaches and other CCPA violations.

The CCPA also requires covered companies to provide new disclosures to California residents, and provides such residents new ways to opt-out of certain sales of personal information.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

California voters also approved the California Privacy Rights Act (“CPRA”) in November 2020.

Effective starting on January 1, 2023, the CPRA will significantly modify the CCPA, including by expanding rights with respect to certain sensitive

personal information creating a new state agency for enforcing the CCPA and the CPRA.

Other states will continue to shape the data privacy environment nationally.

For example, the Virginia Consumer Data Protection Act, or CDPA, becomes effective on January 1, 2023 and the Colorado Privacy Act, or CPA, takes effect on July 1, 2023.

Aspects of these state privacy statutes remain unclear, resulting in further legal uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.

Complying with the GDPR, DSL, PIPL, CCPA, CPRA, CDPA, CPA, or other laws, regulations, amendments to or re-interpretations of existing laws and regulations, and contractual or other obligations relating to privacy, data protection, data transfers, data localization, or information security may require us to make changes to our services to enable us or our customers to meet new legal requirements, incur substantial operational costs, modify our data practices and policies, and restrict our business operations.

Any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.

If we fail to comply with the relevant privacy and security laws and regulations, it could result in regulatory investigations and penalties, which could lead to negative publicity and may cause our investors to lose confidence in the effectiveness of our security measures.

Any inability, or perceived inability, to adequately address privacy and data protection concerns, or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations also could result in additional cost and liability and could damage our reputation and adversely affect our business.

We have increasingly undertaken business initiatives to increase the number and type of investment products we offer to retail investors, which could expose us to new and greater levels of risk.

Although retail investors have been part of our historic distribution efforts, we have increasingly undertaken business initiatives to increase the number and type of investment products we offer to high net worth individuals, family offices and other mass affluent investors.

In some cases we seek to distribute our unregistered funds to such retail investors indirectly through feeder funds sponsored by brokerage firms, private banks or third-party feeder providers, and in other cases directly to the qualified clients of private banks, independent investment advisors and brokers.

In other cases we create registered investment products specifically designed for direct investment by both retail and institutional investors.

In some cases we seek to distribute our unregistered funds to such retail investors indirectly through feeder funds sponsored by brokerage firms, private banks or other similar third-parties, and in other cases directly to the qualified clients of private banks, independent investment advisors and brokers.

In other cases we offer registered investment products specifically designed for direct investment by both retail and institutional investors.

Our initiatives to access retail investors entail the investment of resources and our objectives may not be fully realized.

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To the extent we distribute retail products through new channels, including through unaffiliated firms, we may not be able to effectively monitor or control the manner of their distribution, which could result in litigation against us, including with respect to, among other things, claims that products distributed through such channels are distributed to customers for whom they are unsuitable or distributed in any other inappropriate manner.

Although we seek to ensure through due diligence and onboarding procedures that the channels through which retail investors access our investment products conduct themselves responsibly, to the extent that our investment products are being distributed through third parties, we are exposed to reputation damage and possible legal liability to the extent such third parties improperly sell our products to investors.

Although we seek to ensure through both due diligence and supervisory procedures that the channels through which retail investors access our investment products conduct themselves responsibly, to the extent that our investment products are being distributed through third parties, we are exposed to reputational damage and possible legal liability to the extent such third parties improperly sell our products to investors.

Similarly, the hiring of employees to oversee independent advisors and brokers presents risks if they fail to follow training, review and supervisory procedures.

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The regulatory regimes to which such businesses are subject may, among other things, condition our funds’ ability to invest in those businesses upon the satisfaction of applicable ownership restrictions or qualification requirements.

Our failure to obtain or maintain any regulatory approvals necessary for our funds to invest in such industries may disqualify our funds from participating in certain investments or require our funds to divest themselves of certain assets.

to obtain or maintain any regulatory approvals necessary for our funds to invest in such industries may disqualify our funds from participating in certain investments or require our funds to divest themselves of certain assets.

In recent years, the SEC and its staff have focused on issues relevant to global investment firms and have formed specialized units devoted to examining such firms and, in certain cases, bringing enforcement actions against the firms, their principals and their employees.

We expect a greater level of SEC enforcement activity under the new Administration, and while we have a robust compliance program in place, it is possible this enforcement activity will target practices at which we believe are compliant and which were not targeted by the prior Administration.

It is generally expected that the SEC’s oversight of global investment firms will continue to focus on concerns related to transparency, investor disclosure practices, fees and expenses, valuation and conflicts of interest, which could impact Carlyle in various ways.

For example, our private equity funds frequently engage operating executives and senior advisors who often work with our investment teams during due diligence, provide board-level governance and support and advise portfolio

company management.

We expect a greater level of SEC enforcement activity under the current Administration, and while we believe that we have a robust compliance program in place, it is possible this enforcement activity will target practices that we believe are compliant and which were not targeted by the prior Administration.

Recent SEC focus areas have also included the use and compensation of, and disclosure regarding, operating partners or consultants, outside business activities of firm principals and employees and group purchasing arrangements and general conflicts of interest disclosures.

The SEC is also focused on adherence to practices disclosed in fund offering documents, management of conflicted transactions, management fee calculation, performance advertising and investment due diligence practices.

It is generally expected that the SEC’s oversight of global investment firms will continue to focus on concerns related to transparency, investor disclosure practices, investment risks and conflicts of interest, fees and expenses, liquidity, valuation of assets, and controls around material non-public information, which could impact Carlyle in various ways.

Operating executives and senior advisors generally are third parties, are not considered Carlyle employees and typically are engaged by us pursuant to consulting agreements, and the investors in our private equity funds may bear the cost of the operating executive or senior advisor compensation, as permitted under the relevant fund legal documents.

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While we believe we have made appropriate and timely disclosures regarding the engagement and compensation of our operating executives and senior 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 that have been previously examined are being revisited.

In 2014, the 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 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.

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.

The SEC has also signaled that it will continue to focus on issues specific to private investment funds, including performance advertising, the inclusion of preferred liquidity and disclosure terms in side letters, transparency of fund fees and expenses, and reporting of information to the SEC on Form ADV and Form PF, including proposed amendments to Form PF that would require enhanced disclosure with shorter filing deadlines.

Any new rulemaking by the SEC in these areas could have an impact on our business practices and result in additional operational, administrative and compliance burden and could potentially result in reductions to our revenue, earnings and cash flow.

We also regularly are subject to requests for information and informal or formal investigations by the SEC and other regulatory authorities, with which we routinely cooperate.

In the current environment, even historical practices that have been previously examined are being revisited.

These additional regulatory requirements will increase our compliance costs and may expose us to liabilities and penalties if we fail to comply with the applicable laws, rules and regulations.

In February 2022, the SEC voted to propose new rules and amendments (collectively, the “SEC Proposed Rule”) to existing rules under the Advisers Act specifically related to registered advisers and their activities with respect to private funds.

If enacted, the SEC Proposed Rule could have a significant impact on advisers to private funds, including Carlyle.

In particular, the SEC has proposed to limit circumstances in which a fund manager can be indemnified by a private fund;

increase reporting requirements by private funds to investors concerning performance, fees and expenses;

require registered advisers to obtain an annual audit for private funds and also require such fund’s auditor to notify the SEC upon the occurrence of certain material events;

enhanced requirements, including the need to obtain a fairness opinion and make certain disclosures, in connection with adviser-led secondary transactions (also known as GP-led secondaries);

prohibit advisers from engaging in certain practices, such as, without limitation, charging accelerated fees for unperformed services or fees and expenses associated with an examination to private fund clients and seeking reimbursement, indemnification, exculpation or otherwise limiting an adviser’s liability for certain activities;

and impose limitations and new disclosure requirements regarding preferential treatment of investors in private funds in side letters or other arrangements with an adviser.

If adopted, including with modifications, this new SEC Proposed Rule could have a significant effect on private fund advisers and their operations, including increasing compliance burdens and associated regulatory costs, reducing the ability to receive expense or indemnification reimbursements, and enhancing the risk of regulatory action, including public regulatory sanctions and may result in a change to our practices and create additional regulatory uncertainty.

Further, we note that in connection with the SEC Proposed Rule, if such rule were to be enacted, it could also significantly increase the cost of insurance, specifically D&O and E&O insurance, or may even make such insurance coverage unavailable.

We regularly rely on exemptions from various requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act, the Investment Company Act, the Commodity Exchange Act, and the U.S.

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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.

For example, in 2014, the SEC amended Rule 506 of Regulation D under the Securities Act to impose “bad actor” disqualification provisions which ban an issuer from offering or selling securities pursuant to the safe harbor in Rule 506 if the issuer, or any other “covered person”, is the subject of a criminal, regulatory or court order or other disqualifying event” under the rule which has not been waived by the SEC.

regulatory or court order or other disqualifying event” under the rule which has not been waived by the SEC.

The definition of “covered person” under the rule includes an issuer’s directors, general partners, managing members and executive officers;

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“Business —Regulatory and Compliance Matters.”

We may become subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform.

For example, we have a number of closed-end investment companies in our Global Credit segment including ones that are regulated as business development companies under the Investment Company Act.

These investment companies are subject to inspection by the SEC and to the Investment Company Act and the rules thereunder, which, among other things impose regulatory restrictions on principal transactions between, and joint transactions among, the investment company and certain of its affiliates, including its investment adviser.

We may become subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform, including registered product offerings for retail investors.

For example, we have a number of closed-end investment companies in our Global Credit segment that are subject to the Investment Company Act and the rules thereunder, which, among other things, impose regulatory restrictions on principal transactions between, and joint transactions among, the investment company and certain of its affiliates, including its investment adviser.

Certain of these investment companies are subject to additional securities law requirements due to their status as a publicly-traded issuer, as well as the listing standards of the applicable national securities exchange.

Other jurisdictions, particularly in Europe and the United Kingdom, impose similar (if not greater) regulatory burdens on registered product offerings.

We expect to offer more of these registered investment products in the future to U.S.

These additional regulatory requirements will increase our compliance costs and may expose us to liabilities and penalties if we fail to comply with the applicable laws, rules and regulations.

We are subject to U.S.

and foreign anti-corruption, anti-bribery, and anti-money laundering laws, including the U.S.

Foreign Corrupt Practices Act, as amended (“FCPA”), the U.S.

domestic bribery statute, and the U.S.

Travel Act, and other anti-corruption, anti-bribery, and anti-money laundering laws in the countries in which we conduct activities.

Anti-corruption laws are interpreted broadly and prohibit us from authorizing, offering, or providing, directly or indirectly, improper payments or things of value to recipients in the public or private sector.

In addition, we are subject to the accounting and internal controls provisions of the FCPA, which require us to maintain accurate books and records and a system of internal controls sufficient to detect and prevent corrupt conduct.

We are also subject to U.S.

export controls and economic sanctions administered by the U.S.

Commerce Department, the Office of Foreign Assets Control (“OFAC”) of the U.S.

Treasury Department, and the U.S.

Department of State.

Such export control laws and regulations and economic sanctions are based on U.S.

foreign policy and national security goals, and are enforced against targeted countries, jurisdictions, territories, regimes, entities, organizations and individuals.

Laws in non-U.S.

jurisdictions, including those addressing anti-bribery, anti-corruption, anti-money laundering, economic sanctions or export control, may impose stricter or more onerous requirements than such laws of the United States, and complying with these foreign laws may disrupt our business or cause us to incur significantly more costs to comply with those laws.

For example, in the UK, we are subject to the UK Proceeds of Crime Act 2002 regarding the prevention of money laundering and the financing of terrorism, as well as the UK Bribery Act 2010 prohibiting private and public sector bribery.

Different laws may also contain conflicting provisions, making compliance with all laws more difficult.

We cannot predict the nature, scope or effect of future regulatory requirements to which we might be subject or the manner in which existing laws might be administered, interpreted or enforced.

Our funds’ portfolio companies’ compliance policies and procedures may not prevent all instances of money laundering or bribery, or other prohibited transactions, including those arising from actions by employees, representatives, or other agents, for which we or they might be held responsible.

These various anti-corruption, anti-money laundering, export control, and sanctions laws and regulations relate to a number of aspects of our businesses, including servicing existing fund investors, finding new fund investors and sourcing new investments, as well as the activities of our funds’ portfolio companies, and require ongoing monitoring of both investors and portfolio assets.

government regulators, including the U.S.

Department of Justice, the SEC and OFAC, have devoted more resources to enforcement of the FCPA and export control and sanctions laws as enforcement has become more of a priority in recent years.

A number of other countries, including countries where we and our funds’ portfolio companies maintain operations or conduct business, have also significantly expanded their enforcement activities, especially in regards to anti-corruption.

Recently, the U.S.

government has also used sanctions and export controls to address broader foreign and international economic policy goals.

While we have developed and implemented policies and procedures designed to ensure compliance by us and our personnel with the FCPA and other anti-corruption laws, as well as export control and economic sanctions laws, we cannot ensure that none of our employees, representatives, contractors, partners, and agents will take actions in violations of our policies and applicable law, for which we may be ultimately held responsible.

Any determination that we

have violated these laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation, disbarment and a general loss of investor confidence, any one of which could have a material adverse effect on our results of operations, financial condition and cash flow, as well as our reputation.

In addition, the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRA”) expanded the scope of U.S.

sanctions against Iran and Section 219 of the ITRA amended the Exchange Act to require companies subject to SEC reporting obligations under Section 13 of the Exchange Act to disclose in their periodic reports specified dealings or transactions involving Iran or other individuals and entities targeted by certain sanctions promulgated by the Office of Foreign Assets

Control (“OFAC”) engaged in by the reporting company or any of its affiliates, including in our case some of our portfolio companies, during the period covered by the relevant periodic report.

sanctions against Iran and Section 219 of the ITRA amended the Exchange Act to require companies subject to SEC reporting obligations under Section 13 of the Exchange Act to disclose in their periodic reports specified dealings or transactions involving Iran, or other individuals and entities targeted by certain sanctions promulgated by OFAC, by the reporting company or any of its affiliates, including in our case some of our portfolio companies, during the period covered by the relevant periodic report.

In some cases, the ITRA requires companies to disclose transactions even if they were permissible under U.S.

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Congressional committees.

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

Disclosure of ITRA-specified activity, even if such activity is legally permissible and not subject to sanctions under applicable law, and any fines or penalties actually imposed on us or our affiliates as a result of any impermissible activities, could harm our reputation and have a negative impact on our business.

In the past, we have disclosed pursuant to Section 13 of the Exchange Act, certain permissible dealings and transactions and to date, we have not received notice of any investigation into such activities.

Laws in non-U.S.

jurisdictions, such as EU sanctions or the U.K.

Bribery Act, as well as other applicable anti-bribery, anti-corruption, anti-money laundering, or sanction or other export control laws in the United States and abroad, may also impose stricter or more onerous requirements than the Foreign Corrupt Practices Act (“FCPA”), OFAC, the U.S.

Department of Commerce and the U.S.

Department of State, and implementing them may disrupt our business or cause us to incur significantly more costs to comply with those laws.

Different laws may also contain conflicting provisions, making compliance with all laws more difficult.

If we fail to comply with these laws and regulations, we could be exposed to claims for damages, civil or criminal financial penalties, reputational harm, incarceration of our employees, restrictions on our operations and other liabilities, especially as non-U.S.

regulators increase their enforcement activities, which could materially and adversely affect our business, results of operations and financial condition.

In addition, we may be subject to successor liability for FCPA violations or other acts of bribery, or violations of applicable sanctions or other export control laws committed by companies in which we or our funds invest or which we or our funds acquire.

On January 18, 2022, the U.S.

Department of Justice Antitrust Division and the U.S.

Federal Trade Commission (“FTC”) launched a joint public inquiry aimed at strengthening enforcement against illegal mergers, citing evidence that many industries across the economy are becoming more concentrated and less competitive.

Antitrust regulators in several foreign jurisdictions have announced similar antitrust enforcement initiatives.

These initiatives are expected to increase scrutiny of mergers and acquisitions and to result in the adoption of more stringent guidelines for pre-approval of mergers.

As a result, the process of obtaining pre-approval from the FTC and other non-U.S.

antitrust authorities for mergers and acquisitions undertaken by the investment funds we manage is expected to become more challenging, more time consuming, and more expensive.

If certain proposed acquisitions or dispositions of portfolio companies by our managed investment funds are delayed or rejected by antitrust regulators, it could have an adverse impact on our ability to generate future performance revenues and to fully invest the available capital in our funds, as well as reduce opportunities to exit and realize value from our fund investments.

If we fail to comply with this multitude of laws and regulations, even where conflicts of law arise, we could be exposed to claims for damages, civil or criminal penalties, incarceration of our employees, restrictions on our operations (including disbarment) and other liabilities, especially as non-U.S.

regulators increase their enforcement activities, which could materially and adversely affect our business, results of operations, financial condition, cash flow and our reputation.

In addition, we may be subject to successor liability for FCPA violations or other acts of bribery, or violations of applicable anti-corruption, sanctions or export control laws committed by companies in which we or our funds invest or which we or our funds acquire.

It is unclear what impact the United Kingdom’s exit from the European Union will have on the Company or the fund portfolio companies.

The United Kingdom (the “UK”) held a referendum in June 2016 on whether to remain a member state of the EU, in which a majority of voters voted to leave the EU.

The UK formally notified the European Council of its intention to leave the EU on March 29, 2017.

The UK held a referendum in June 2016 on whether to remain a member state of the EU, in which a majority of voters voted to leave the EU.

The UK officially left the EU on January 31, 2020, and a transition period of 11 months commenced on this date to allow for the negotiation of a new trade agreement.

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Various EU laws have been adopted into domestic UK legislation and certain transitional regimes and deficiency-correction powers exist to ease the transition.

The UK and the EU announced, on December 24, 2020, that they have reached agreement on a new Trade and Cooperation Agreement (the “TCA”), which addresses the future relationship between the parties.

The UK and the EU announced, on December 24, 2020, that they had reached agreement on a new Trade and Cooperation Agreement (the “TCA”), which addresses the future relationship between the parties.

The TCA was approved by the UK Parliament on December 30, 2020.

Due to the TCA only being agreed shortly before the end of the transition period, it will apply on a provisional basis in the EU until it is formally ratified by the European Parliament.

Due to the TCA only being agreed shortly before the end of the transition period, it applied on a provisional basis in the EU until it was formally ratified by the European Parliament and has applied permanently from May 1, 2021.

The TCA covers, for example, measures to preserve tariff-free trade in goods and the ability of UK nationals to travel to the EU on business but defers other issues.

While the TCA includes a commitment by the UK and the EU to keep their markets open for persons wishing to provide financial services through a permanent establishment, it does not substantively address future cooperation in the financial services sector or reciprocal market access into the EU by UK-based firms under equivalence arrangements.

The European Commission has indicated that its assessment of the UK’s replies to its equivalence enquiries remains ongoing and, at this stage, there is no certainty as to when such assessments will be concluded or whether the UK will be deemed equivalent in some or all of the individual assessments.

While the TCA provides clarity in some areas, the impact of the UK’s withdrawal from the EU (“Brexit”) on our business operations in the UK and the EU, and on the private investment funds industry and global financial markets more broadly, remains uncertain.

While the TCA provides clarity in some areas, the impact of Brexit on our business operations in the UK and the EU, and on the private investment funds industry and global financial markets more broadly, remains uncertain.

This is driven in part by the ongoing uncertainty relating to equivalence and the extent to which the EU will grant reciprocal access to UK firms in the financial services sector.

As a new agreement, the implications and operation of the TCA may also evolve during the remainder of 2021, and potentially beyond that date.

Uncertainty about the way in which these and other complex issues will be resolved could adversely affect the Company, its investment funds and portfolio companies (especially if its investment funds include, or expose them to, businesses that depend on access to the single market, the customs union, or whose value is affected adversely by the UK’s future relationship with the EU).

The size and importance of the UK’s economy, coupled with uncertainty or unpredictability about the precise nature of its future legal, political and economic relationship with the EU following the implementation of the TCA (and any subsequent discussions between the UK and EU in respect of matters not within its scope) may continue to cause instability, significant currency fluctuations and/or other adverse effects on international markets, international trade agreements

and/or other existing cross-border cooperation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise).

As a new agreement, the implications and operation of the TCA may also be subject to change and/or develop at short notice.

In any case, as of January 1, 2021, our UK FCA-authorized affiliates, CECP and CELF, ceased to be entitled to exercise single market passport rights to provide investment services in or into the EEA on a cross-border services basis.

Certain EEA investor-facing activities previously carried on by those firms have been reorganized so that they are performed now by different, EEA established affiliates under alternative licensing arrangements.

These arrangements may subject us to additional regulatory obligations and may impede our ability to raise capital from EEA investors.

In this respect and otherwise, uncertainty about the way in which these and other complex issues will be resolved could adversely affect the Company, its investment funds and portfolio companies (especially if its investment funds include, or expose them to, businesses that depend on access to the single market, the customs union, or whose value is affected adversely by the UK’s future relationship with the EU).

In addition, Brexit could have a destabilizing effect if any other member states were to consider withdrawing from the EU.

The decision for any other member state to withdraw from the EU could exacerbate such uncertainty and instability and may present similar and/or additional potential risks and consequences for the Company, its investment funds and fund portfolio companies.

The Company set up a Brexit Contingency Planning Committee (the “Brexit Committee”) in September 2016 to conduct a risk review and track key political and business-related developments related to Brexit.

On taxation, the Brexit Committee has considered, amongst other things, the availability of EU tax directives to our UK-based entities in the post-Brexit landscape and the impact that loss of such directives may have on the structure of our investment funds and portfolio investments.

We are also engaging in regular and continuing dialogue with UK tax authorities (HMRC) and Treasury in respect of the tax framework that may apply between the UK and EU post Brexit and the impact of such framework on our business.

The Brexit Committee continuously monitors the activities of those portfolio companies which could be impacted by Brexit,” including considering the impact on debt restructuring and capital raising plans.

The Brexit Committee coordinates engagement with portfolio company management to address identified issues.

Financial 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.

These complex issues and other by-products of Brexit, such as the tightening of credit in the UK commercial real estate market, may also increase the costs of having operations, conducting business and making investments in the UK and Europe.

As a result, the performance of our funds which are focused on investing in the UK and to a lesser extent across Europe, may be disproportionately affected compared to those funds that invest more broadly across global geographies or are focused on different regions.

The uncertainty surrounding the precise nature of the UK’s future legal relationship with the EU may continue to be a source of significant exchange rate fluctuations and/or other adverse effects on international markets.

Unhedged currency fluctuations have the ability to adversely affect our funds and their underlying portfolio companies.

Further, the development of the UK’s future legislative approach remains uncertain.

The UK may elect in the future to repeal, amend or replace EU laws, which could exacerbate the uncertainty and result in divergent UK national laws and regulations.

Changes to the regulatory regimes in the UK or the EU and its member states could materially affect our business prospects and opportunities and increase our costs.

In addition, Brexit could potentially disrupt the tax jurisdictions in which we operate and affect the tax benefits or liabilities in these or other jurisdictions in a manner that is adverse to us and/or our funds.

Any of the foregoing could materially and adversely affect our business, results of operations and financial condition.

Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of increased regulatory focus could result in additional burdens and expenses on our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted in 2010, has imposed significant changes on almost every aspect of the U.S.

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In June 2020, U.S.

federal regulatory agencies adopted additional revisions to the Volcker Rule’s current restrictions on banking entities sponsoring and investing in certain covered hedge funds and private equity funds, including by adopting new exemptions allowing banking entities to sponsor and invest without limit in credit funds, venture capital funds, customer facilitation funds and family wealth management vehicles (the “Covered Fund Amendments”).

allowing banking entities to sponsor and invest without limit in credit funds, venture capital funds, customer facilitation funds and family wealth management vehicles (the “Covered Fund Amendments”).

The Covered Fund Amendments also loosen certain other restrictions on extraterritorial fund activities and direct parallel or co-investments made alongside covered funds.

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These FINRA rules effectively prohibit 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.

with) state officials by individuals and entities seeking to do business with state entities, including investment by public retirement funds.

There have also been similar laws, rules and regulations and/or policies adopted by a number of states and municipal pension plans, which prohibit, restrict or require disclosure of payments to (and/or certain contracts with) state officials by individuals and entities seeking to do business with state entities, including investment by public retirement funds.

The Dodd-Frank Act also imposes a regulatory structure on the “swaps” market, including requirements for clearing, exchange trading, capital, margin, reporting, and recordkeeping.

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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.

On May 16, 2016, the SEC and other federal regulatory agencies proposed a rule that would apply requirements on incentive-based compensation arrangements of "covered financial institutions," including certain registered investment advisers and broker-dealers above an specific asset threshold.

This, if adopted, could limit our ability to recruit and retain investment professionals and senior management executives.

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In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act became law, which modified automatic additional regulatory compliance issues for financial entities that were deemed “Systemically Important Financial Institutions” (SIFI) from $50 billion AUM to $250 billion AUM.

There is legislative risk under the new Administration that such designation will revert back to $50 billion and expand its application to include private equity asset management firms.

In July 2019, proposed legislation was introduced into the U.S.

Congress which contains a number of provisions that, if they were to become law, would adversely impact alternative asset management firms.

There is legislative risk under the current Administration that such designation will revert back to $50 billion and expand its application to include private equity asset management firms.

Following the 2020 presidential and congressional elections in the U.S.

there has been an increased risk of legislative and regulatory action that could adversely limit and affect our and our funds’ portfolio companies’ business.

For example, proposed legislation that was introduced into the U.S.

Congress in July 2019 was reintroduced in October 2021, containing a number of provisions that, if they were to become law, would adversely impact alternative asset management firms.

Among other things, the bill would:

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(6) increase tax rates on carried interest;

and (7) prohibit portfolio companies from paying dividends or repurchasing their shares during the first two years following the acquisition of the portfolio company.

If the proposed bill, or other similar legislation, were to garner enough support from the current Democratic-controlled Administration and U.S.

Congress and become law, it would adversely affect us, our portfolio companies and our investors.

and (7) prohibit portfolio companies from paying dividends or repurchasing their shares or

outsourcing jobs at portfolio companies during the first two years following the acquisition of the portfolio company.

In addition, in August 2021, legislation was introduced in the Senate that would require holders of carried interest to recognize a specified amount of deemed compensation income each year regardless of whether the investment partnership recognizes income or gain and regardless of whether and when the holders receive distributions in respect of their carried interests.

If these proposed bills or parts thereof, or other similar legislation, were to become law, it could negatively impact us, our funds’ portfolio companies and our investors.

Future legislation, regulation or guidance may have an adverse effect on the fund industry generally and/or us, specifically.

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executive administration or Congressional leadership.

The SEC has also signaled that it intends to pursue additional regulation of private fund fees and conflicts of interest, including potentially requiring greater transparency of fund fees and expenses.

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, there may be an increase in regulatory investigations of the trading and other investment activities of private funds, including our investment funds.

Compliance with any new laws or regulations could make compliance more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability.

Any changes in the regulatory framework applicable to our business, including the changes described above, may impose additional costs on us, impact our ability to generate revenue, require the attention of our senior management or result in limitations on the manner in which we conduct our business.

Moreover, we anticipate there may be an increase in regulatory investigations of the trading and other investment activities of private funds, including our investment funds.

Compliance with any new laws or regulations (including recent heightened SEC scrutiny regarding adviser compliance with advisers’ own internal policies) could make compliance more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability.

The short-term and long-term impact of the Basel capital standards is uncertain.

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Regulatory initiatives in jurisdictions outside the United States could adversely affect our business.

Similar to the environment in the United States, the current environment in jurisdictions outside the United States in which we operate, in particular the EU, has become subject to an expanding body of regulation.

Governmental regulators and other authorities in the EU have proposed or implemented a number of initiatives and additional rules and regulations that could adversely affect our business.

Similar to the environment in the United States, the current environment in jurisdictions outside the United States in which we operate, in particular the EU and the UK, has become subject to an expanding body of regulation.

Governmental regulators and other authorities in the EU and the UK have proposed or implemented a number of initiatives and additional rules and regulations that could adversely affect our business.

New prudential regimes for EU and UK investment firms.

On December 5, 2019, a new EU legislative package replacing the existing prudential framework for EU investment firms was published in the Official Journal of the European Union, which is due to take effect on June 26, 2021.

The legislation consists of the Investment Firm Regulation and the Investment Firm Directive (together “IFR/IFD”).

IFR/IFD will substantially increase regulatory capital requirements for certain investment firms and impose more onerous remuneration rules, and revised and extended internal governance, disclosure, reporting, liquidity, and group “prudential” consolidation requirements (among other things).

Depending upon how member states implement IFR/IFD, these rules or certain aspects of them may also apply to AIFMs that have been licensed to provide investment services via a “top-up” MiFID permission, such as AlpInvest.

The UK has confirmed that it will be implementing its own version of IFR/IFD, the Investment Firms Prudential Regime (the “IFPR”), which was initially expected to go into effect in June 2021 but has been delayed until January 1, 2022.

The IFPR will apply to our subsidiaries that are UK investment firms, namely CECP Advisors LLP and CELF Advisors LLP.

IFR/IFD represents a complete overhaul of "prudential" regulation (i.e.

capital adequacy, liquidity adequacy, governance, remuneration policies and practices, public transparency and regulatory reporting) in the EU and substantially increases regulatory capital requirements for certain investment firms and imposes more onerous remuneration rules, and revised and extended internal governance, disclosure, reporting, liquidity, and group “prudential” consolidation requirements (among other things).

IFR/IFD affects AlpInvest, one of our subsidiaries, because it is an alternative investment fund manager in the Netherlands with MiFID top-up permissions to provide investment services.

The UK has implemented its own version of IFR/IFD, the Investment Firms Prudential Regime (the “IFPR”), which took effect from January 1, 2021.

The IFPR applies to our subsidiaries that are UK investment firms under the post-Brexit UK-retained Markets in Financial Instruments Directive (as restated, "MiFID II"), namely CECP and CELF.

Under the IFPR, among other requirements, both CECP and CELF are required to maintain a more onerous policy on remuneration, set an

appropriate ratio between the variable and fixed components of total remuneration and meet requirements on the structure of variable remuneration.

These requirements may make it more difficult for us to attract and retain staff.

IFPR will also result in increased regulatory capital and liquidity adequacy requirements for CECP, in particular, which may increase the costs of doing business and may impede intra-group capital and cash flows.

The AIFMD was implemented in most jurisdictions in the EEA, on July 22, 2014.

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The AIFMD also regulates and imposes regulatory obligations in respect of the marketing in the EEA by AIFMs (whether established in the EEA or elsewhere) of AIFs (whether established in the EEA or elsewhere).

The UK implemented AIFMD while it was still a member of the EU and therefore similar requirements therefore continue to apply in the UK notwithstanding Brexit.

The UK implemented AIFMD while it was still a member of the EU and “onshored” it as part of UK law, such that similar requirements continue to apply in the UK notwithstanding Brexit.

AlpInvest, one of our subsidiaries, obtained authorization in 2015 and is licensed as an AIFM in the Netherlands.

Additionally, in 2017, one of our subsidiaries, Carlyle Real Estate SGR S.p.A was registered as an AIFM in Italy and in 2018, one of our subsidiaries, CIM Europe, obtained authorization as an AIFM in Luxembourg.

The European Commission is currently reviewing the AIFMD and launched a public consultation in October 2020 (which closed on January 29, 2021) on potential improvements to this regulatory framework (commonly referred to as “AIFMD II”).

The consultation touches on the areas of investor protection in relation to client classification, the possibility of a depository passport, mandatory disclosures under the AIFMD and rules relating to conflicts of interest and valuation as well as the use of liquidity risk management tools, possible enhancements to Annex IV reporting and loan originating AIFs.

At this time, it is difficult to predict the final form of the recast AIFMD II and its impact on our business.

Given the significance of this review process as well as its potential impact on the European fund industry framework, we will need to consider the potential impact of AIFMD II on our business, particularly with regard to delegation of certain AIFM duties to third-countries that may affect both operating models of CIM Europe and AlpInvest, extension of the directive to third country firms and a push towards harmonization of the Collective Investment in Transferable Securities (“UCITS”) and

AIFMD frameworks.

In 2017, the European Commission started a review of AIFMD.

The European Commission published a report on the operation of the AIFMD in January 2019, which identified certain areas requiring further analysis.

A subsequent report on the application and scope of the AIFMD was published in June 2020.

Following these reports, the European Commission launched a public consultation relating to its review of the AIFMD in October 2020, which closed on January 29, 2021.

In November 2021, the European Commission published draft legislation, commonly referred to as “AIFMD II”.

Subject to the EU ordinary legislative process involving the European Parliament and European Council, this is expected to result in amendments to the AIFMD, which will affect firms two years after the legislation comes into force, possibly in 2024.

It is unclear at this stage how the AIFMD II will affect us or our subsidiaries.

The current draft proposes a number of amendments to the AIFMD, including more onerous delegation requirements, enhanced substance requirements, additional liquidity management provisions for AIFMs to the extent that they manage open-ended AIFs, and revised regulatory reporting and investor disclosures requirements.

The draft proposes significant new requirements relating to the activities of funds which originate loans including new restrictions on the structure which such funds may take.

It also proposes to introduce new conditions for non-EEA AIFMs, such as certain of our US affiliates, to be able to make use of the national private placement regimes of EEA states, including a condition that the jurisdiction of neither of the AIFM and AIF have been identified as non-cooperative third countries for tax purposes nor deemed by the EU not to comply fully with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and thereby to ensure an effective exchange of information in tax matters.

This gives rise to a risk that certain of our AIFs may not be able to take advantage of such regimes to raise capital from EEA investors, potentially with little notice.

Given the significance of this review process as well as its potential impact on the European fund industry framework, we have been considering the potential impact of AIFMD II on our business, particularly with regard to delegation of certain AIFM duties to third-countries that may affect both operating models of CIM Europe and AlpInvest, extension of the directive to third country firms and a push towards harmonization of the Collective Investment in Transferable Securities (“UCITS”) and AIFMD frameworks.

AIFMD II has the potential to limit market access for our non-EU funds.

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It is not yet clear to what extent (if any) the UK would reflect AIFMD II in its domestic rules.

CBDF Directive and CBDF Regulation .

In August 2021, two main legislative instruments – Directive (EU) 2019/1160 (the “CBDF Directive”) and Regulation (EU) 2019/1156 (the “CBDF Regulation”) came into effect.

The CBDF Regulation and CBDF Directive lay out, among other things, general principles to be adhered to by fund managers when drafting pre-marketing and marketing communications.

It also harmonizes the pre-marketing requirements across the EEA by requiring EU AIFMs to notify their local regulator of their intention to pre-market in certain EEA jurisdictions within two (2) weeks of pre-marketing having begun.

CIM Europe and AlpInvest began to file such pre-marketing notifications with the CSSF for any new fund and we are working to incorporate the relevant requirements under the CBDF Directive and CBDF Regulation into the firm’s global marketing policy.

Solvency II .

The European solvency framework and prudential regime for insurers and reinsurers, under the Solvency II Directive 2009/138/EC (“Solvency II”), took effect in full on January 1, 2016.

Solvency II is a regulatory regime which imposes economic risk-based solvency requirements across all EU Member States and consists of three pillars:

Pillar I-quantitative capital requirements, based on a valuation of the entire balance sheet;

Pillar II-qualitative regulatory review, which includes governance, internal controls, enterprise risk management and supervisory review process;

and Pillar III-market discipline, which is accomplished through reporting of the insurer’s financial condition to regulators and the public.

Solvency II is supplemented by European Commission Delegated Regulation (E.U.) 2015/35 (the “Delegated Regulation”), other European Commission “delegated acts” and binding technical standards, and guidelines issued by the European Insurance and Occupational Pensions Authority.

The Delegated Regulation sets out detailed requirements for individual insurance and

reinsurance undertakings, as well as for groups, based on the overarching provisions of Solvency II, which together make up the core of the single prudential rulebook for insurance and reinsurance undertakings in the EU.

Solvency II sets out stronger capital adequacy and risk management requirements for European insurers and reinsurers and, in particular, dictates how much capital such firms must hold against their liabilities and introduces a risk-based assessment of those liabilities.

Solvency II imposes, among other things, substantially greater quantitative and qualitative capital requirements for insurers and reinsurers as well as other supervisory and disclosure requirements.

We are not subject to Solvency II;

however, many of our European insurer or reinsurer fund investors are subject to this directive, as applied under applicable domestic law.

Solvency II may impact insurers’ and reinsurers’ investment decisions and their asset allocations.

In addition, insurers and reinsurers will be subject to more onerous data collation and reporting requirements.

As a result, there is the potential for Solvency II to have an adverse indirect effect on our businesses by, among other things, restricting the ability of European insurers and reinsurers to invest in our funds and imposing on us extensive disclosure and reporting obligations for those insurers and reinsurers that do invest in our funds.

A broad review of Solvency II was carried out by the European Commission in 2020 (the “Solvency II 2020 review”), with input from the European Insurance and Occupational Pensions Authority (“EIOPA”).

This included a related public consultation launched by the European Commission in July 2020.

On December 17, 2020, EIOPA submitted its opinion on the Solvency II 2020 review to the European Commission.

The Solvency II 2020 review is expected to result in amendments to various aspects of Solvency II, although the extent of such amendments is as yet unknown.

Following this, on September 22, 2021, the European Commission published proposed legislation to amend the Solvency II Directive.

The proposals are under review of the subject to the EU ordinary legislative process involving the European Parliament and the European Council, with the implementation date of the revised Solvency II Directive currently unknown.

It is unclear at this stage the extent to which the proposed amendments to Solvency II will have an indirect effect on our businesses.

The recast Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation (collectively referred to as “MiFID II”) came into effect on January 3, 2018.

Although the UK has now withdrawn from the EU, its rules implementing the recast Markets in Financial Instruments Directive continue to have effect and the Markets in Financial Instruments Regulation has been on-shored into UK law (subject to certain amendments to ensure it operates properly in a UK-specific context) in connection with such withdrawal.

MiFID II amended the existing MiFID regime and, among other requirements, introduced new organizational and conduct of business requirements for investment firms in the EEA.

Certain requirements of MiFID II also apply to AIFMs with a MiFID “top-up” permission, such as AlpInvest.

MiFID II extended MiFID requirements in a number of areas such as the receipt and payment of inducements (including investment research), suitability and appropriateness assessments, conflicts of interest, record-keeping, costs and charges disclosures, best execution, product design and governance, and transaction and trade reporting.

Under MiFID II, national competent authorities are also required to establish position limits in relation to the maximum size of positions which a relevant person can hold in certain commodity derivatives.

The limits apply to contracts traded on trading venues and their economically equivalent OTC contracts.

The position limits established, as amended from time to time, and our ability to rely on any exemption thereunder may affect the size and types of investments we may make.

Failure to comply with MiFID II and its associated legislative acts could result in sanctions from national regulators, the loss of market access and a number of other adverse consequences which would have a detrimental impact on our business.

Certain aspects of MIFID II and Markets in Financial Instruments Regulations (“MiFIR”) are subject to review and change in both the EU and the UK

Swiss Marketing Regulations .

The Swiss Financial Services Act (FinSA) and the Financial Institution Act (FinIA) came into force on January 1, 2020 with a transition period that ended on December 31, 2021.

FinSA seeks to protect clients of financial service providers and to establish comparable conditions for the provision of financial services by financial service providers (FSP), and thus contributes to enhancing the reputation and competitiveness of Switzerland's financial center.

FinIA introduces coordinated supervision for the various categories of financial institutions:

portfolio managers, trustees, managers of collective assets, fund management companies and securities firms.

The new Swiss regulations have an impact on the offering and marketing foreign investment fund shares into Switzerland on a cross-border basis and creates new requirements for financial service providers.

Anti-Money Laundering.

During 2020, two new Anti-Money Laundering (AML) Directives came into force;

During 2020, two new EU Anti-Money Laundering (AML) Directives came into force:

the fifth AML EU Directive (AMLD5) and the sixth AML EU Directive (AMLD6).

AMLD5 was implemented into UK law on January 10, 2020.

The changes under AMLD5 include:

new more stringent customer due diligence measures and requirements to report discrepancies between information held and the Companies House register and to conduct risk assessments prior to the launch or use of new products, and business practices.

AMLD5 will add complexity to our internal processes and any perceived shortcomings in our adoption of AMLD5 could create reputational risks to our business.

AMLD5 has added complexity to our internal processes and any perceived shortcomings in our adoption of AMLD5 could create reputational risks to our business.

AMLD6 harmonizes the definition of money laundering across the EU, expands the number of offenses that fall under the definition of money laundering and extends criminal liability to include punishments for legal persons, including partnership entities.

On July 20, 2021, the European Commission presented an ambitious package of legislative proposals to strengthen the EU’s anti-money laundering and countering the financing of terrorism (AML/CFT) rules, including the creation of a new pan-EU supervisory authority to combat money laundering.

The UK government has not yet implemented AMLD6.

Securitization Regulation.

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Sustainable Finance .

In March 2018, the European Commission adopted an action plan on financing sustainable growth.

The action plan is, among other things, designed to define and reorient investment toward sustainability and a number of legislative initiatives are underway.

In particular:

• On December 9, 2019, a new regulation (Regulation (EU) 2019/2088) on sustainability-related disclosures in the financial sector was published in the Official Journal of the European Union (the “Sustainable Finance Disclosure Regulation” or “SFDR”).

The majority of its provisions will apply from March 10, 2021.

The Sustainable Finance Disclosure Regulation aims to address information asymmetries between investors and those acting for them in relation to the environmental and social characteristics of investments and the sustainability risks and impact involved.

It introduces mandatory sustainability-related transparency and disclosure requirements for, among others, MiFID investment firms providing investment advisory or portfolio management services, and AIFMs.

• In June 2020, a new EU regulation establishing a general framework for determining which economic activities qualify as “environmentally sustainable” was published in the Official Journal of the European Union (the “Taxonomy Regulation”).

The Taxonomy Regulation introduces certain mandatory disclosure requirements (which supplement those set out in SFDR) for financial products which have an environmentally sustainable investment objective or which promote environmental characteristics.

The Taxonomy Regulation is due to take effect starting in January 2022 and is expected to impact Carlyle AIFMs in the EEA and certain AIFMs outside of the EEA (“Non-EEA AIFMs”) where they market funds in the EEA under the National Private Placement Regime (“NPPR”).

Much of the detail around the various EU sustainable finance initiatives is yet to be agreed and has been further delayed by the COVID-19 pandemic so it is not possible at this stage to fully assess how our business will be affected.

Certain ESG-related initiatives being considered could require an AIFM to quantify sustainability risks and integrate principal adverse impacts in such quantification, as well as in their investment decision making processes, alongside the interests and preferences of investors.

There is a risk that a large amount of additional data may need to be collected and disclosed pursuant to these ESG regulations, which could materially increase the compliance burden and costs for our operations.

While the UK is not expected to implement equivalent legislative initiatives, it has signaled an intention to introduce a new legislative framework focused on implementing the recommendations of the Financial Stability Board Taskforce on Climate-related Financial Disclosures (“TCFD”), in particular by introducing mandatory TCFD-aligned disclosure requirements for UK firms.

This framework is still in development and will be subject to a phased implementation, meaning it is not expected to begin to apply to the asset management sector until 2022 at the earliest.

It is unclear at this stage what impact this new regime will have on our business.

We, our funds and their portfolio companies face increasing public scrutiny related to ESG activities.

We and they risk damage to our brand and reputation, if we or they fail to act responsibly in a number of areas, such as diversity, equity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering ESG factors in our investment processes.

Adverse incidents with respect to ESG activities could impact the value of our brand, or the brand of our funds or their portfolio companies, the cost of our or their operations and relationships with investors, all of which could adversely affect our business and results of operations.

Additionally, new regulatory initiatives related to ESG that are applicable to us, our funds and their portfolio companies could adversely affect our business.

In May 2018, the European Commission adopted an “action plan on financing sustainable growth.” The action plan is, among other things, designed to define and reorient investment toward sustainability.

The action plan contemplates:

establishing EU labels for green financial products;

clarifying asset managers' and institutional investors' duties regarding sustainability in their investment decision-making processes;

increasing disclosure requirements in the financial services sector around ESG and strengthening the transparency of companies on their ESG policies and introducing a ‘green supporting factor’ in the EU prudential rules for banks and insurance companies to incorporate climate risks into banks’ and insurance companies’ risk management policies.

A number of these initiatives are underway and on December 9, 2019, Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial sector was published in the Official Journal of the European Union (the “Sustainable Finance Disclosure Regulation” or “SFDR”).

SFDR introduces mandatory sustainability-related transparency requirements for MiFID investment firms providing portfolio management or investment advisory services, and AIFMs.

The majority of the provisions of SFDR have applied since March 10, 2021.

For us, this primarily impacts our AIFMs by requiring certain firm-level website disclosures regarding how sustainability risks are integrated into investment processes and remuneration practices.

In addition, fund-level disclosures are required in relation to the integration of sustainability risks into investment decisions and potential impacts on fund returns.

From January 1, 2022, further disclosures in periodic reports are required and, from January 1, 2023 certain template pre-contractual and periodic disclosures must be adopted.

Further, firms that offer financial products (such as AIFs) that promote environmental or social characteristics, or which have a sustainable investment objective, will also need to comply with additional disclosure and periodic reporting requirements that are broadly designed to prevent firms from “greenwashing” (i.e., the holding out of a product as having green or sustainable characteristics where this is not, in fact, the case).

There is a risk that a significant reorientation in the market following the implementation of these and further measures could be adverse to our portfolio companies if they are perceived to be less valuable as a consequence of, among other things, their carbon footprint or “greenwashing.” There is also a risk that market expectations in relation to the SFDR categorization of financial products could adversely affect our ability to raise capital.

In addition, on June 22, 2020, Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment was published in the Official Journal of the European Union (the “Taxonomy Regulation”).

The Taxonomy Regulation sets out a framework for classifying economic activities as “environmentally sustainable” and also introduces certain mandatory disclosure and reporting requirements (which supplement those set out in SFDR) for financial products that have an environmentally sustainable investment objective or that promote environmental characteristics.

The Taxonomy Regulation takes effect in part from January 2022 and in part from January 2023.

A significant amount of detail surrounding these EU sustainable finance initiatives is yet to be revealed and has been further delayed by the COVID-19 pandemic so it is not possible at this stage to fully assess how our business will be affected.

We, our funds and their portfolio companies are subject to the risk that similar measures might be introduced in other jurisdictions in which we or they currently have investments or plan to invest in the future.

Additionally, compliance with any new laws or regulations increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we, our funds or their portfolio companies conduct our businesses and adversely affect our profitability.

The UK intends to introduce a new legislative framework focused on implementing the recommendations of the Financial Stability Board Taskforce on Climate-related Financial Disclosures (“TCFD”), in particular by introducing mandatory TCFD-aligned disclosure requirements for UK firms.

The FCA published a policy statement with the near-finalized rules on

December 17, 2021.

The rules capture asset managers including, so far as relevant, certain private fund advisors such as CECP and investment portfolio managers such as CELF, as well as insurers and FCA-regulated pension providers.

For the largest in-scope firms (those with over £50 billion in AUM), the rules apply from January 1 2022, with the first public disclosures to be made by June 30, 2023.

For those below this threshold but above £5 billion in AUM, the rules will apply from January 1, 2023, with disclosures to be made by June 30, 2024.

The impact of this new regime to our business is currently under review.

In addition, the UK FCA is consulting on additional sustainability disclosure requirements and sustainability labels for investment products.

The FCA published a discussion paper on November 3, 2021, proposing a three-tiered system with different levels of disclosures targeted at different types of investors and different classifications for products according to their sustainability activities and objectives.

The FCA is also considering whether to introduce specific sustainability-related requirements for financial advisors and how (if at all) the regime should apply to funds that are being marketed into the UK.

A consultation paper is expected to be published in the second quarter of 2022, with the date of application of these new requirements and the full detail of them yet to be provided.

We will monitor these developments and how they may impact our businesses.

Leveraged Transactions.

In May 2017, the European Central Bank (“ECB”) issued guidance on leveraged transactions which applies to significant credit institutions supervised by the ECB in member states of the Euro zone.

Under the guidance,

credit institutions should have in place internal policies that include a definition of “leveraged transactions”.

Under the guidance, credit institutions should have in place internal policies that include a definition of “leveraged transactions”.

Loans or credit exposures to a borrower should be regarded as leveraged transactions if:

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Following these guidelines, credit institutions in the Euro zone could in the future limit, delay or restrict the availability of credit and/or increase the cost of credit for our investment funds or portfolio companies involved in leveraged transactions.

This policy area remains under close scrutiny and further guidance could be issued on short notice in the future.

In March 2018, the European Commission published a proposal for a new directive governing credit servicers, credit purchasers and the recovery of collateral in connection with loans (the “Credit Servicers and Purchasers Directive” or “CSPD”).

The policy aim behind the CSPD is the development of a well-functioning secondary market for non-performing loans.

The CSPD was finalized and published in the Official Journal of the European Union on December 8, 2021 and entered into force on December 28, 2021.

Member States are required to adopt and apply measures implementing the CSPD by December 30, 2023 and entities carrying on credit servicing activities from December 30, 2023 will be required to obtain authorization under the CSPD by June 29, 2024.

The CSPD applies to, among others, “credit servicers” and “credit purchasers” and would impose a number of new requirements relating to licensing, conduct of business and provision of information.

The definition of “credit servicer” in the Commission proposal is sufficiently broad that it could be construed to include asset managers.

The Directive prima facie limits the scope of the requirements for credit servicers and credit purchasers to the servicing or purchasing of credit agreements originally issued by a credit institution established in the EU or its subsidiaries established in the EU.

This is subject however, to individual Member State discretion.

Such Member States may choose to extend the CSPD requirements to credit agreements that are not issued by an EU credit institution.

Subject to the aforementioned potential extension of scope by individual Member States, the servicing of loans originally advanced by credit funds (rather than, for example, an EU bank) will fall outside the scope of the CSPD.

Asset managers are unlikely to act as principal credit purchasers.

However, they may purchase in-scope credit agreements as agent on behalf of the funds or separately managed accounts for whom they are acting and therefore may in practice be required to discharge the associated obligations on behalf of underlying clients.

Compliance with these rules could involve a material cost to our business.

Hong Kong Security Law.

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Chinese Regulations.

In August 2014, China Securities Regulatory Commission (“CSRC”), the Chinese securities regulator, promulgated the Interim Regulations on the Supervision and Administration of Private Investment Funds (the “CSRC Regulations”).

The CSRC Regulations adopt a very broad definition of private investment funds, potentially including private equity funds.

In August 2014, the China Securities Regulatory Commission (the “CSRC”), the Chinese securities regulator, promulgated the Interim Regulations on the Supervision and Administration of Private Investment Funds (the “CSRC Regulations”).

The CSRC Regulations adopt a very broad definition of private investment funds, including private equity funds.

In accordance with the CSRC Regulations and other relevant PRC laws, regulations and authorizations, the CSRC has become the principal regulator of private equity funds in China.

CSRC has designated that the Asset Management Association of China (“AMAC”), an industry body, with responsibility to introduce and promote regulations towards a degree of self-regulation across private equity funds in China.

In recent years, regulations, directives and guidelines from AMAC have continued to regulate private investment funds incorporated in China.

For example, during the course of 2016, AMAC issued “ Guidelines for Internal Control of Privately-raised Investment Fund Managers” (February, 2016), “ Administrative Measures for Information Disclosure of Privately-raised Investment Fund” (February, 2016), “ Announcement on Further Regulating Relevant Matters Concerning the Registration of the Managers of the Privately-Raised Funds” (February, 2016), “ Measures for the Administration of Private Placement of Private Investment Funds” (April, 2016), “ Private Equity Fund Contract Guidelines No.

3” ( April, 2016), “Administrative Measures for Private Investment Fund Services” (March, 2017), and “Implementing Guidelines on the Administration of Investor Suitability for Fund Raising Institutions” (July 2017), in addition to the regulations and directives from SCRS and AMAC.

If a private capital fund wishes to accept capital contributions from a PRC governmental body or authority then that fund will also need to subject itself (including specific conditions as regards the general partner and/or the private investment fund manager) to the supervision of National Development and Reform Commission (“NDRC”).

In accordance with the NDRC’s regulations on governmental fund of funds’ participation in equity investment funds, the private investment fund is subject to requirements relating to the industry focus, investment scope, investment restrictions, risk control and information disclosure.

The general partner and/or the private investment fund manager are also subject to additional restrictions and qualification requirements and are required to fulfill reporting and filing obligations to NDRC (in addition to any reporting or filing obligations to CSRC, AMAC, or others).

These regulations may have an adverse effect on us and/or our renminbi ( RMB)-denominated investment funds by, among other things, increasing the regulatory burden and costs of raising money for RMB-denominated investment funds, especially given the differing nature of certain obligations to multiple regulatory bodies, imposing extensive disclosure obligations on RMB-denominated investment funds and their associated portfolio companies, and disadvantaging our investment funds as bidders, imposing significant capital requirements on managers of RMB denominated investment funds, imposing numerous registrations and ongoing filings by private investment fund managers in China with multiple government authorities.

In December 2020, the CSRC further promulgated Several Provisions on Strengthening the Regulation of Private Investment Funds, pursuant to which the CSRC strengthened its regulations on private investment funds and private investment fund managers.

CSRC has designated that the Asset Management Association of China (the “AMAC”), an industry body, with responsibility to introduce and promote regulations towards a degree of self-regulation across private equity funds in China.

In recent years, regulations, directives and guidelines from the AMAC have continued to regulate private investment funds incorporated in China.

For example, during the course of 2016, the AMAC issued “ Guidelines for Internal Control of Privately-raised Investment Fund Managers” (February, 2016), “ Administrative Measures for Information Disclosure of Privately-raised Investment Fund” (February, 2016), “ Announcement on Further Regulating Relevant Matters Concerning the Registration of the Managers of the Privately-Raised Funds” (February, 2016), “ Measures for the Administration of Private Placement of Private Investment Funds” (April, 2016), “ Private Equity Fund Contract Guidelines No.

3” ( April, 2016), “Administrative Measures for Private Investment Fund Services” (March, 2017), “Implementing Guidelines on the Administration of Investor Suitability for Fund Raising Institutions” (July, 2017), “ Guidelines on the Valuation of the Private Equity Investments of Privately-raised Investment Funds (for Trial Implementation) ” (July, 2018), “ Guidelines on the Name of Privately-raised Investment Funds ” (November, 2018), “ Notice on Privately-raised Fund Manager Registration ” (December, 2018), “ Notice on Privately-raised Investment Fund Filing ” (December, 2019), “ Notice on Facilitating the Application of Privately-raised Fund Manager Registration ” (February, 2020), “ Notice on Strengthening the Self-Regulatory Management of Privately-raised Fund Information Submission and Optimizing Industry Services ” (February, 2021), in addition to the regulations and directives from the CSRC and the AMAC.

If a private equity fund wishes to accept capital contributions from a PRC governmental body or authority then that fund will also need to subject itself (including specific conditions as regards the general partner and/or the private investment fund manager) to the supervision of the National Development and Reform Commission (the “NDRC”).

If a private equity fund wishes to accept capital contributions from a PRC insurance company then that fund will also need to subject itself (including specific conditions as regards the general partner and/or the private investment fund manager) to the supervision of the China Banking and Insurance Regulatory Commission (the “CBIRC”).

In accordance with the NDRC’s regulations on governmental fund of funds’ participation in equity investment funds, and/or the CBIRC’s regulations on insurance companies, the private investment fund is subject to requirements relating to the industry focus, investment scope, investment restrictions, risk control and information disclosure.

The general partner and/or the private investment fund manager are also subject to additional restrictions and qualification requirements and are required to fulfill reporting and filing obligations to the NDRC and/or the CBIRC (in addition to any reporting or filing obligations to the CSRC, the AMAC, local financial bureaus or others).

Data Privacy.

The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

Carlyle and our portfolio companies collect personally identifiable information (“PII”) and other sensitive and confidential data as an integral part of our business processes and activities.

This data is wide ranging and relates to our investors, employees, contractors and other counterparties and third parties.

Our compliance obligations include those relating to U.S.

laws such as the California Consumer Privacy Act (the

“CCPA”), which provides for enhanced consumer protections for California residents, a private right of action for data breaches and statutory fines and damages for data breaches or other CCPA violations, as well as a requirement of “reasonable” cybersecurity.

Many foreign countries and governmental bodies, including the European Union and other relevant jurisdictions where Carlyle and our portfolio companies conduct business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdiction that are more restrictive than those in the U.S.

For example, the GDPR in Europe, the Japanese Personal Information Protection Act, the Hong Kong Personal Data (Privacy) Ordinance, the Australian Privacy Act and the Brazilian Bank Secrecy Law.

Global laws in this area are rapidly increasing in the scale and depth of their requirements, and are also often extra-territorial in nature.

In addition, a wide range of regulators are seeking to enforce these laws across regions and borders.

Furthermore, we frequently have privacy compliance requirements as a result of our contractual obligations with counterparties.

These legal and contractual obligations heighten our privacy obligations in the ordinary course of conducting our business in the U.S.

and internationally.

The UK has adopted the GDPR and similar requirements continue to apply in the UK notwithstanding Brexit.

As a result of Brexit, however, the UK is now a third country for the purposes of the GDPR regulation.

This regulation provides for a transitional period during which transfers of personal data from the EU to the UK will not be considered as transfers to a third country under EU GDPR.

If this transitional period ends without the European Commission adoption of an adequacy decision in relation to the UK, transfers of personal data from the EU to the UK will be subject to additional requirements under the EU GDPR rules on exporting data outside the EU, which may involve an increased compliance burden.

Transfers of personal data from the UK to the EU will continue to be permitted under UK GDPR without the need for compliance with additional data export requirements.

While Carlyle has taken various measures and made significant efforts and investment to ensure that our policies, processes and systems are both robust and compliant with these obligations, our potential liability remains, particularly given the continued and rapid development of privacy laws and regulations around the world, and increased enforcement action.

Any inability, or perceived inability, by us or our portfolio companies to adequately address privacy concerns, or comply with applicable laws, regulations, policies, industry standards and guidance, contractual obligations, or other legal obligations, even if unfounded, could result in significant regulatory and third-party liability, increased costs, disruption of our and our portfolio companies’ business and operations, and a loss of client (including investor) confidence and other reputational damage.

Furthermore, as new privacy-related laws and regulations are implemented, the time and resources needed for us and our portfolio companies to comply with such laws and regulations continues to increase.

See “—Laws and regulations relating to privacy, data protection, data transfers, data localization, and data security worldwide may limit the use and adoption of our services and adversely affect our business” for more information.

Other Similar Measures.

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Moreover, sensitive business information relating to us or our portfolio companies could be publicly released.

See “—Risks Related to Our Business Operations —Our investment funds make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States” and “Part I.

See “—Risks Related to Our Business Operations — Our investment funds make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States” and Item 1.

“Busin e ss—Regulatory and Compliance Matters” for more information.

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As such, certain of our or our subsidiaries’ risk management or other commodities interest-related activities may be subject to CFTC oversight.

Consequently, certain CFTC rules expose

global investment firms, such as us, to increased registration and reporting requirements in connection with transactions in futures, swaps and other derivatives regulated by the CFTC.

Consequently, certain CFTC rules expose global investment firms, such as us, to increased registration and reporting requirements in connection with transactions in futures, swaps and other derivatives regulated by the CFTC.

These regulations have required us to reassess certain business practices related to our pooled vehicles, consider registration of certain entities with the CFTC or file for additional exemptions from such registration requirements.

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The replacement of LIBOR with an alternative reference rate may adversely affect our credit arrangements and our collateralized loan obligation transactions.

LIBOR and certain other “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform.

London Inter-Bank Offered Rate (“LIBOR”) and certain other “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform.

These reforms have resulted in plans to phase out and eventually replace LIBOR which may cause such benchmarks to perform differently than in the past or have other consequences which cannot be predicted.

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As a result of the phasing out of this benchmark, interest rates on our floating rate obligations, loans, deposits, derivatives, and other financial instruments tied to LIBOR rates, as well as the revenue and expenses associated with those financial instruments, may be adversely affected.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has recommended replacing USD LIBOR with a new reference rate derived from short-term repurchase agreements backed by Treasury securities, the Secured Overnight Financing Rate (“SOFR”).

However, certain market constituencies have criticized SOFR’s suitability as a LIBOR replacement, and the extent of SOFR-based instruments issued or trading in the market remains a fraction of LIBOR-based instruments.

As such, there remains uncertainty regarding the future utilization of SOFR, LIBOR and other “IBORS,” and the nature of any replacement rates.

It is unclear what methods of calculating a replacement benchmark will be established or adopted generally, and whether different industry bodies, such as the loan market and the derivatives market will adopt the same methodologies.

To address the transition away from LIBOR, we have amended our credit agreements and related loan documentation to provide for an agreed upon methodology to calculate a new benchmark rate spreads, but there are as yet no comparable forward-looking benchmarks for the various LIBOR tenors.

We are carefully evaluating our CLOs to identify any discrepancy between the interest rate an issuer pays on its liabilities compared to the interest rate on the underlying assets, or the amounts payable under a derivative used to hedge its currency or interest rate exposure.

For our latest generation of CLOs, we have been incorporating provisions to address the transition from LIBOR, however certain older CLOs have not yet come up for amendment or refinancing, and as such may not currently contain clear LIBOR transition procedures.

Additionally, there will be significant work required to transition to using the new benchmark rates and implement necessary changes to our systems, processes and models.

This may impact our existing transaction data, products, systems, operations, and valuation processes.

The calculation of interest rates under the replacement benchmarks could also negatively impact our business and financial results.

To address the transition away from LIBOR, we have amended our credit agreements and related loan documentation to provide for an agreed upon methodology to calculate new benchmark rate spreads, but there are as yet no comparable forward-looking benchmarks for the various LIBOR tenors.

The calculation of interest rates under the replacement benchmarks could negatively impact our business and financial results.

We are assessing the impact of the transition;

however, we cannot reasonably estimate the impact of the transition at this time.

There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases or volatility in risk-free benchmark rates, or borrowing costs to borrowers, any of which could have a material adverse effect on our business, result of operations, financial condition, and unit price.

For our more recent generation of CLOs, we have incorporated provisions to address the transition from LIBOR, however certain older CLOs have not yet come up for amendment or refinancing, and as such may not currently contain clear LIBOR transition procedures.

In January 2022, we priced our first CLO to SOFR, which the industry has

generally adopted to replace LIBOR.

As the market fully transitions from LIBOR, we expect that there will be short-term rate mismatches, which could adversely impact the returns on our CLOs.

If the transition from LIBOR results in an overall increase to borrowing costs, higher interest expense could negatively affect the financial results and valuations of our funds’ portfolio companies.

In addition, uncertainty with respect to reference rates may delay the implementation of related systems and processes necessary to process financial instruments.

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.

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.

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As a general matter, we expect that the cost of insurance will increase significantly, and we do not believe we will recover the same amount of insurance proceeds as we have in prior years.

Further, we note that in connection with the prohibited activities rule under the SEC Proposed Rule discussed above, if such rule were to be enacted, it could substantially increase our exposure to litigation generally, including by way of a simple negligence standard as opposed to a gross negligence standard.

The laws and regulations governing the limited liability of such issuers and portfolio companies vary from jurisdiction to jurisdiction, and in certain contexts the laws of certain jurisdictions may provide not only for carve-outs from limited liability protection for the issuer or portfolio company that has incurred the liabilities, but also for recourse to assets of other entities under common control with, or that are part of the same economic group as, such issuer.

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There can be no assurance that the Company will not be adversely affected as a result of the foregoing risks.

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.

If any litigation or regulatory actions 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.

Recently there has been an elevated level of focus put on our industry and companies in which our funds are invested, including increased focus on externalities of business activities such as ESG considerations.

See “—Risks Related to Our Company—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.” 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), regulators or employees, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities, the private equity industry in general or our workplace, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses.

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Employee misconduct or fraud could include, among other things, binding the Company to transactions that exceed authorized limits or present unacceptable risks and other unauthorized activities or concealing unsuccessful investments (which, in either case, may result in unknown and unmanaged risks or losses), or otherwise charging (or seeking to charge) inappropriate expenses or engaging in inappropriate or unlawful behavior or actions directed towards other employees.

It is not always possible to deter misconduct or fraud by employees or service providers, and the precautions

we take to detect and prevent this activity may not be effective in all cases.

It is not always possible to deter misconduct or fraud by employees or service providers, and the precautions we take to detect and prevent this activity may not be effective in all cases.

In the current remote work environment we may have less of an ability to supervise our employees, which could expose us to an enhanced risk of misconduct or fraud.

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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 stock.

In addition, we will also be adversely affected if there is fraud, other deceptive practices or other misconduct by personnel of the portfolio companies in which our funds invest.

In addition, we will also be adversely affected if there is fraud, other deceptive practices or other misconduct by personnel of the portfolio companies in which our funds invest, including such activities that predate our acquisition of the portfolio company.

For example, improper or illegal conduct by personnel at our portfolio companies or failure by such personnel to comply with anti-bribery, trade sanctions, anti-harassment, legal and regulatory requirements could adversely affect our business and reputation.

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As a result of the expansion of our platform into various lines of business in the asset management industry, our acquisition of new businesses, and the growth of our managed account business, we are subject to a number of actual and potential conflicts of interest and subject to greater regulatory oversight than 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.

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

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

As a practical matter, the establishment and maintenance of such information barriers means that collaboration between our investment professionals across various platforms or with respect to certain investments may be limited, reducing potential synergies that we cultivate across these businesses through our “One Carlyle” approach.

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.

See “—Risks Related to Our Business Operations—Our Investment Solutions business is subject to additional risks.” In addition, we may come into possession of material, non-public information with respect to issuers in which we may be considering making an investment.

For example, although we maintain ultimate control over the Global Investment Solutions segment’s constituent firm, AlpInvest, we have erected an information barrier between the management teams at AlpInvest and the rest of Carlyle.

See “—Risks Related to Our Business Operations—Our Global Investment Solutions business is subject to additional risks.” In addition, we may come into possession of material, non-public information with respect to issuers in which we may be considering making an investment.

As a consequence, we may be precluded from providing such information or other ideas to our other businesses that could benefit from such information.

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In some of our funds, such as our carry funds, a reduction in the value of the portfolio investments held in such funds could result in a reduction in the carried interest we earn or in our management fees.

In our CLOs, defaults or downgrades of the CLOs’ underlying collateral obligations could cause failures of certain overcollateralization tests and the potential for insufficient funds to pay expected management fees on any such CLO, which would result in either a temporary deferral or permanent loss of such management fees.

In our CLOs, defaults or downgrades of the CLOs’ underlying collateral obligations could cause failures of certain over collateralization tests and the potential for insufficient funds to pay expected management fees on any such CLO, which would result in either a temporary deferral or permanent loss of such management fees.

See “—Our CLO business and investment into CLOs involves certain risks.”

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These repayment obligations may be related to amounts previously distributed to our senior Carlyle professionals prior to the completion of our initial public offering, with respect to which our stockholders did not receive any benefit.

See “—We may need to pay “giveback” obligations if and when they are triggered under the governing agreements with our investors” and Note 11 to our consolidated financial statements included in this Annual Report on Form 10-K.

See “—We may need to pay “giveback” obligations if and when they are triggered under the governing agreements with our investors” and Note 10 to our consolidated financial statements included in Part II.

to this Annual Report on Form 10-K.

Poor performance of our investment funds may also make it more difficult for us to raise new capital.

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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.

In 2019, we exceeded our goal of raising approximately $100 billion in new capital commitments.

Notwithstanding the pandemic and volatile economy, we raised $27.5 billion in new capital commitments in 2020 led by our Global Credit and Investment Solutions funds.

We raised $51.3 billion in new capital commitments in 2021 driven by the launch of our ninth U.S.

real estate fund, eighth U.S.

buyout fund and our CP Growth fund in our Global Private Equity segment, coupled with continued strength in fundraising for our Global Credit and Global Investment Solutions funds.

However, we cannot assure that our prior success in raising capital will continue in the future.

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

Certain of these factors such as 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.

Certain of these 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 private credit funds typically use distributions from prior investments to meet future capital calls.

In cases where valuations of existing investments fall, the investment pace is delayed and 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, there can be no assurance that this historical or current levels of commitments to our funds will continue.

Moreover, recently many funds sponsored by Carlyle and its competitors have invested more rapidly than in the past.

As a result, investors may delay making new commitments until such time these investments start distributing capital.

Although many investors have increased and signaled that they expect to maintain the amount of commitments they are making to alternative investment funds, there can be no assurance that 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.

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Investors may also seek to consolidate their investments with a smaller number of investment managers or prefer to pursue investments directly instead of investing through our funds, each of which could impact the amount of allocations they make to our funds.

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.

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

The ongoing changes in international and domestic tax regulations, including BEPS, may adversely impact the tax neutrality of our funds, which could in turn limit investment in our funds from certain classes of investors.

We are working to create avenues through which we expect to attract a new base of individual investors.

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

Certain investors have also implemented or may implement restrictions against investing in certain types of asset classes such as fossil fuels, which would affect our ability to raise new funds focused on those asset classes, such as funds focused on energy or natural resources, and which could have a negative impact on our ability to exit certain of our energy investments, or our ability to invest capital in our conventional energy funds.

Certain investors have also implemented or may implement restrictions against investing in certain types of asset classes such as fossil fuels, which would affect our ability to raise new funds focused on those asset classes, such as funds focused on conventional energy or natural resources, and which could have a negative impact on our ability to exit certain of our energy investments, or our ability to invest capital in our conventional energy funds.

Funds focused on investing in carbon-based energy (“Carbon Energy Funds”) remain a significant part of our business (8% of total AUM) so the persistence of weakened market fundamentals in the energy sector could translate into future performance below investor expectations which, together with negative sentiments around carbon energy funds, could result in less investor demand for these funds in the future.

Our total AUM in Carbon Energy Funds has already decreased from $23 billion in 2015 to $20 billion in 2020 and is expected to further decline in the future as Carlyle has determined not to raise a successor fund to Carlyle Energy Mezzanine Opportunities Fund II or Carlyle Power Partners II.

Carlyle has determined not to raise a successor fund to Carlyle Energy Mezzanine Opportunities Fund II or Carlyle Power Partners II.

Carlyle’s future investments in carbon-based energy are expected to be made primarily through NGP in the United States and Carlyle International Energy Partners outside the United States.

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As of December 31, 2021, we continue to believe that our investment in NGP is not impaired.

Further, fund investors and shareholders are increasingly focused on ESG matters and certain fund investors consider ESG factors in determining whether to invest in our funds and our common stock.

In addition, some fund investors use third-party benchmarks or scores to measure our ESG practices and decide whether to invest in our funds, and capital commitments to us and may condition capital commitments on taking or refraining from taking certain actions.

Investors and stockholders may choose not to invest in our funds or exclude our common stock from their investments if our ESG practices do not fit their investment profiles, or if we fail to demonstrate progress towards our ESG goals, which could adversely impact our reputation our ability to raise capital and could cause the price of our common stock to decrease.

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.

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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.

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.

For instance, our latest generation U.S., Europe and Asia buyout funds have increased the percentage of transaction fees that are shared with fund investors from 80% to 100% of the fees we generate.

For instance, our more recent generations of U.S., Europe and Asia buyout funds have increased the percentage of transaction fees that are shared with fund investors from 80% to 100% of the fees we generate.

Given this change in terms, and to the extent we change our fee practices for other successor funds, we could experience a meaningful decline in the amount of transaction fee revenue we earn.

In particular, if our fund investors do not continue to agree that we are permitted to retain fees we derive from capital markets transactions involving our portfolio companies, the ability of our GCM group to produce fee revenue could be significantly hindered.

Further, as institutional investors increasingly consolidate their relationships with investment firms and competition becomes more acute, we may receive more requests to modify the terms of our new funds, including reductions in management fees.

Any agreement to or changes in terms less favorable to us could result in a material decrease in our profitability.

Moreover, certain institutional investors have publicly criticized certain fund fee and expense structures, including management fees.

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In certain cases, we have agreed to charge management fees based on invested capital or net asset value as opposed charging management fees on committed capital.

Further, the SEC’s focus on certain fund fee and expense arrangements may lead to increased publicity that could cause fund investors to further resist certain fees and expense reimbursements.

Any modification of our existing fee or carry arrangements or the fee or carry structures for new investment funds could adversely affect our results of operations.

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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.

Investments for which market prices are not observable include, but are not limited to illiquid investments in operating companies, real estate, energy ventures, infrastructure projects, structured vehicles and other funds, and encompass all components of the capital structure, including equity, mezzanine, debt, preferred equity and derivative instruments such as options and warrants.

Fair values of such investments are determined by reference to the market approach (i.e., multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable public entities or transactions, adjusted by management as appropriate for differences between the investment and the referenced comparables), the income approach (i.e., discounting projected future cash flows of the investee company or asset and/or capitalizing representative stabilized cash flows of the investee company or asset) and other methodologies such as prices provided by reputable dealers or pricing services, option pricing models and replacement costs.

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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 and/or derive a different value than the other sponsor has derived on the same investment, which could cause some investors to question our valuations.

Because there is significant uncertainty in the valuation of, or in the stability of the value of, illiquid investments, the fair values of such investments as reflected in an investment fund’s net asset value do not necessarily reflect the prices that would be obtained by us on behalf of the investment fund when such investments are realized.

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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.

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 stock.

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Moreover, with respect to the historical returns of our investment funds:

• we may create new funds in the future that reflect a different asset mix and different investment strategies, as well as a varied geographic and industry exposure as compared to our present funds, and any such new funds could have different returns than our existing or previous funds;

• our historical returns derive largely from the performance of our existing funds, and we may create new funds in the future that reflect a different asset mix and different investment strategies, as well as a varied geographic and industry exposure as compared to our present funds, and any such new funds could have lower returns than our existing or previous funds;

• the performance of our carry funds reflects our valuation of the unrealized investments held in those funds using assumptions that we believe are reasonable under the circumstances, but the actual realized return on these investments will depend on, among other factors, future operating results and the value of assets and market conditions at the time of disposition all of which may differ from the assumptions on which the valuations in our historical returns are based, which may adversely affect the ultimate value realized from those unrealized investments;

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• the rates of returns of some of our funds in certain years have been positively influenced by a number of investments that experienced rapid and substantial increases in value following the dates on which those investments were made, which may not occur with respect to future investments;

• our investment funds’ returns in some years have benefited from investment opportunities and general market conditions that may not repeat themselves;

• our investment funds’ returns in some years have benefited from investment opportunities and general market conditions that may have been significantly more favorable for generating positive performance than current market conditions or market conditions that we may experience in the future and may not repeat themselves;

• our current or future investment funds might not be able to avail themselves of comparable investment opportunities or market conditions;

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• newly-established funds may generate lower returns during the period that they take to deploy their capital;

Our recent performance has benefited from today’s high multiples and asset prices.

In the current market environment, earning such returns on new investments will be much more difficult than in the past and the future internal rate of return for any current or future fund may vary considerably from the historical internal rate of return generated by any particular fund or for our funds as a whole.

• the introduction of fund-level leverage in more recent funds has increased the rates of returns in those funds compared to what they would have been without the use of such leverage.

Our recent performance has benefited from recent high multiples and asset prices.

In the current market environment, we expect that earning such returns on new investments will be much more difficult than in the past and the future internal rate of return for any current or future fund may vary considerably from the historical internal rate of return generated by any particular fund or for our funds as a whole.

Future returns 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.

See—“Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Analysis—Fund Performance Metrics” for additional information.

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Many of our carry funds’ investments rely heavily on the use of leverage, and our ability to achieve attractive rates of return on investments will depend on our ability to access sufficient sources of indebtedness at attractive rates.

For example, in many private equity investments, indebtedness may constitute and historically has constituted up to 70% or more of a portfolio company’s or real estate asset’s total debt and equity capitalization, including debt that may be incurred in connection with the

investment, whether incurred at or above the investment-level entity.

The absence of available sources of sufficient debt financing for extended periods of time could therefore materially and adversely affect our Global Private Equity businesses.

As the COVID-19 crisis began, in an effort to ensure adequate liquidity for an unknown period of time and avoid potential future disruptions in normal financial market function, many of our portfolio companies drew down available lines of credit in excess of typical utilization.

These precautionary efforts ensured availability of working capital and avoided unnecessary business disruption.

As the COVID-19 pandemic began, in an effort to ensure adequate liquidity for an unknown period of time and avoid potential future disruptions in normal financial market function, many of our portfolio companies drew down available lines of credit in excess of typical utilization.

These precautionary efforts provided availability of working capital and avoided unnecessary business disruption.

Certain of these portfolio companies may retain this capital for an extended period and therefore, the leverage at these portfolio companies will increase.

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Additionally, to the extent there is a reduction in the availability of financing for extended periods of time, the purchasing power of a prospective buyer may be more limited, adversely impacting the fair value of our funds’ investments and thereby reducing the acquisition price.

Finally, the interest payments on the indebtedness used to finance our carry funds’ investments have historically been deductible expenses for income tax purposes, subject to limitations under applicable tax law and policy.

The availability of interest deductions for U.S.

federal income tax purposes, however, is limited under rules imposed by the TCJA which apply complex limitations on the deductibility of net business interest expense over 30% of a taxpayer’s taxable income of such business (with adjustments for certain interest and taxes, and for taxable years before 2022, depreciation and amortization).

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law on March 27, 2020 and is part of U.S.

legislation intended to address the impact of the COVID-19 pandemic.

The CARES Act includes provisions that modify the limitation on business interest rules imposed by the TCJA for tax years beginning in 2019 and 2020, increasing the limitation from 30% to 50% and providing special rules for partnerships to temporarily increase business interest deductibility.

These rules, as well as any future changes in such tax law or policy to eliminate or substantially limit these income tax deductions, as have been discussed from time to time in various other jurisdictions, could 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, 2015, the OECD published additional papers under the BEPS initiative.

In action 4, the OECD recommended 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.

Many countries have adopted legislation limiting the amount of interest expense which will be deductible, which may impact the cash flow and value of our investments and ultimate profitability.

See “— Our funds make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States.”

Finally, recent developments in U.S.

and international tax policy have significantly limited the availability of income tax deductions for interest payments on leverage used to finance some of our funds’ investments.

Interest deductibility rules continue to evolve, and further restrictions and changes are anticipated in the U.S.

and other jurisdictions.

See “ —Risks Related to Taxation—Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could negatively impact our effective tax rate and tax liability .” Such restrictions could reduce the after-tax rates of return on the affected investments, which may have an adverse impact on our business and financial results.

Investments in highly leveraged entities are also inherently more sensitive to declines in revenue, increases in expenses and interest rates and adverse economic, market and industry developments.

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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 fees), brand recognition, types of products offered and business reputation.

Our investment 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).

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• some of our funds may not perform as well as competitors’ funds or other available investment products;

• fund investors may reduce their investments in our funds or decrease their allocations in new funds based on a variety of factors, such as the occurrence of an economic downturn, their available capital, regulatory requirements, a desire to consolidate their relationships with investment firms or other considerations;

• several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that otherwise could be exploited;

• some of these competitors (including strategic 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 our funds with respect to investment opportunities;

• some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds than us, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make;

• some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we do and/or bear less compliance expense than us;

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• our competitors have instituted or may institute low cost high speed financial applications and services based on artificial intelligence and new competitors may enter the asset management space using new investment platforms based on artificial intelligence;

• the proliferation of special purpose acquisition companies (“SPACs”) entering the market may compete with our funds for investment opportunities and drive up asset prices;

• there are relatively few barriers to entry impeding the formation of new investment firms, and the successful efforts of new entrants into our various businesses, including former “star” portfolio managers at large diversified financial institutions as well as such institutions themselves, is expected to continue to result in increased competition;

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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.

See “—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.”

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.”

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

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Before making private equity and other investments, we conduct due diligence that we deem reasonable and appropriate based on the known facts and circumstances applicable to each investment.

The objective of the due diligence

process is to identify attractive investment opportunities based on the known facts and circumstances and initial risk assessment surrounding an investment and, depending on our ownership or control of private equity investments, prepare a framework that may be used from the date of an acquisition to drive operational achievement and value creation.

When conducting due diligence, we may be required to evaluate important and complex business, financial, regulatory, tax, accounting, environmental (including climate change) and legal issues.

The objective of the due diligence process is to identify attractive investment opportunities based on the known facts and circumstances and initial risk assessment surrounding an investment and, depending on our ownership or control of private equity investments, prepare a framework that may be used from the date of an acquisition to drive operational achievement and value creation.

When conducting due diligence, we may be required to evaluate important and complex business, financial, regulatory, tax, accounting, environmental (including climate change), social, governance and legal issues.

Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment.

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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.

Due to intense competition in the marketplace we may have less time than in the past to complete our due diligence or our competitors may review less due diligence thereby increasing the speed with which they complete their review.

We cannot be certain that the due diligence investigation 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, which may also be further exacerbated by the COVID-19 pandemic, which, in some cases, has changed the way we conduct due diligence due to travel and other health restrictions that may affect our ability to have in person meetings with certain potential target company personnel, customers, vendors and other service providers.

The due diligence process in connection with carve-out transactions may underestimate the complexity and/or level of dependence a business has on its parent company and affiliated entities.

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Failure to identify risks associated with our investments could have a material adverse effect on our business.

In addition, the global outbreak of COVID-19 may impact our ability to conduct due diligence on investment opportunities in the normal manner.

More specifically, during fiscal 2020, travel restrictions negatively affected our ability to have in person meetings with potential target company personnel, customers, vendors and other service providers and such restrictions are likely to continue during fiscal 2021.

Similarly, lower business confidence and generally higher levels of uncertainty as a result of the COVID-19 outbreak has made it more difficult to assess target company valuations and delayed our ability to complete due diligence on attractive businesses or assets that we identify, and may continue to do so in the future.

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.

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Additionally, certain provisions of the U.S.

federal securities laws (e.g., Exchange Act Section

16) may constrain our investment funds’ ability to effect purchases or sales of publicly traded securities.

federal securities laws (e.g., Exchange Act Section 16) may constrain our investment funds’ ability to effect purchases or sales of publicly traded securities.

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.

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• the financial resources of tenants;

• changes in building, environmental and other laws;

• changes in building, environmental, zoning and other laws;

• failure to obtain necessary approvals and/or permits;

• energy and supply shortages;

• casualty or condemnation losses;

• various uninsured or uninsurable risks;

• natural disasters;

• natural disasters, including increased physical risks from climate change such as event-driven exposures resulting from the increased severity of extreme weather events and consequences of longer-term shifts in climate patterns, and the effects of climate change on supply and demand;

• changes in government regulations (such as rent control);

• changes in the way real estate is occupied as a result of pandemics or other unforeseen events;

• changes in real property tax rates and operating expenses;

• changes in interest rates;

• the reduced availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable;

• the reduced availability of mortgage funds or other forms of financings, including construction financing, which may render the sale or refinancing of properties difficult or impracticable;

• inability to meet debt obligations

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• contingent liabilities on disposition of assets;

• unexpected cost overruns in connection with development projects;

• increase in insurance premiums and changes to the insurance market;

• unexpected cost overruns and delays in connection with development projects;

• terrorist attacks, war and other factors that are beyond our control;

• dependence on local operating partners.

Our real estate funds’ portfolio investments are subject to various risks that cause fluctuations in occupancy, rental rates, operating income and expenses or that render the sale or financing of the funds’ portfolio investment properties difficult or unattractive, which risks have been exacerbated by the COVID-19 pandemic.

For example, following the termination or expiration of a tenant’s lease, there could be a period of time before a funds’ portfolio investment will begin receiving rental payments under a replacement lease.

During that period, the portfolio investments (and indirectly, the funds) will continue to bear fixed expenses such as interest, real estate taxes, maintenance and other operating expenses.

In addition, declining economic conditions could impair the portfolio investments’ ability to attract replacement tenants and achieve rental rates equal to or greater than the rents paid under previous leases.

Increased competition for tenants would require the portfolio investments to make capital improvements to properties that we would not otherwise have planned.

Any unbudgeted capital improvements that a fund undertakes may divert cash that would otherwise be available for distribution to investors.

To the extent that the portfolio investments are unable to renew leases or re-let spaces as leases expire, decreased cash flow from tenants will result, which would adversely impact the relevant fund’s returns.

Our real estate funds may also make investments in residential real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more highly susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets.

With regards to potential environmental liabilities, ownership of real assets in our investment funds or vehicles may increase our risk of liability under laws that impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for damages.

In addition, changes in environmental laws or regulations or the environmental condition of an investment may create liabilities that did not exist at the time of acquisition.

For example, the new Administration announced several initiatives and have proposed new regulations focused on the climate crisis which could impact our real estate assets in various ways that were not considered at the time of investment.

For example, the current Administration announced several initiatives and have proposed new regulations focused on the climate crisis which could impact our real estate assets in various ways that were not considered at the time of investment.

Even in cases where we are indemnified by a seller against liabilities arising out of violations of environmental laws and regulations, there can be no assurance as to the financial viability of the seller to satisfy such indemnities or our ability to achieve enforcement of such indemnities.

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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.

Additionally, lenders in commercial real estate financing have been requiring a non-recourse carveout guarantee, which typically provides that the lender can recover losses from guarantors for certain bad acts, such as fraud or intentional misrepresentation, intentional waste, willful misconduct, criminal acts, misappropriation of funds, voluntary incurrence of prohibited debt and environmental losses sustained by lender.

For our acquisitions, non-recourse carveout guarantees may be extended by our funds.

We expect that commercial real estate financing arrangements generally will increasingly continue to

require non-recourse carveout guarantees and, in the event that such a guarantee is called, a fund’s or our assets could be negatively impacted and we or our funds may be subject to liability.

The acquisition, ownership and disposition of real properties carry certain specific litigation risks.

Litigation may be commenced with respect to a property acquired in relation to activities that took place prior to the acquisition of such property.

In addition, at the time of disposition, other potential buyers may bring claims related to the asset or for due diligence expenses or other damages.

After the sale of a real estate asset, buyers may later sue our funds or us for losses associated with latent defects or other problems not uncovered in due diligence.

Litigation can arise for events or circumstance that occur or are alleged to occur during the ownership period.

We or our funds may also be subject to certain risks associated with investments in particular real estate-related assets.

Real estate investment trusts (“REITs”) may be affected by changes in the value of their underlying properties and defaults by borrowers or tenants, and changes in tax laws or by a failure to qualify for tax-free pass through income could impair a REIT’s ability to generate cash flows to make distributions.

Qualification as a REIT also depends on a REITs ability to meet various requirements imposed by the U.S.

Internal Revenue Code of 1986, as amended (the “Code”), which relate to organizational structure, annual distributions, diversity of stock ownership, and certain restrictions with regard to the nature of their assets and the sources of their income.

If a REIT fails to qualify as a REIT in any taxable year, it will be subject to U.S.

federal income tax at regular corporate rates, and applicable state and local taxes, which would reduce the amount of cash available for distribution to its stockholders.

Investments in real estate debt investments may be unsecured and/or subordinated to a substantial amount of indebtedness and may not be protected by financial covenants.

Non-performing real estate loans may require a substantial amount of workout negotiations and/or modification, which may entail, among other things, a substantial reduction in the interest rate and a substantial write-down of the principal of such loan.

Investments in commercial mortgage loans are subject to risks of delinquency, foreclosure and loss of principal.

In the event of any default under a mortgage loan held directly by us or one of our funds, we or our fund will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the loan.

Investments in distressed assets or businesses may have little or no near-term cash flow, involve a high degree of risk and, if subject to bankruptcy or insolvency, could be subordinated or disallowed.

We often pursue investment opportunities that involve business, regulatory, legal or other complexities.

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If we engage in hedging transactions, we may be exposed to additional risks associated with such transactions.

See “—Risks Related to Our Business Operations—Risk management activities may adversely affect the return on our and our funds’ investments.” And “—Financial 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.”

See “—Risk management activities may adversely affect the return on our and our funds’ investments,” and “—Risks Related to Our Company—Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of increased regulatory focus could result in additional burdens and expenses on our business.”

Our funds make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States.

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For example, the imposition of a new national security law has increased overall uncertainty about risks associated with international trade with Hong Kong, the potential for increased taxation on Hong Kong-related transactions, and new regulatory restrictions and data protection concerns for businesses operated in Hong Kong (including our Hong Kong operations).

In April 2020, the Government of India issued Press Note 3, which requires prior government approval of all foreign direct investment by non-resident entities located in, or having beneficial owners in, countries that share a land border with India.

While further clarity is expected from the Government, the application of these rules may inhibit our funds’ ability to consummate investments in India and may require partial or full exclusion of any fund investor from countries bordering India from such investments.

Uncertainty resulting from the application of these rules may also lead to higher amounts of, or longer durations of, borrowings by the investment funds pending the receipt of approvals, and we or our funds being subject to fines if different regulators apply and enforce the rules differently.

We operate in numerous national and subnational jurisdictions throughout the world and are subject to complex taxation requirements that could result in the imposition of taxes in excess of any amounts that are reserved

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If, as of December 31, 2021, all of the investments held by our carry funds were deemed worthless, the amount of realized and distributed carried interest subject to potential giveback would have been $1.5 billion, on an after-tax basis where applicable.

Since inception, we have realized $216.1 million in aggregate giveback obligations, which were funded primarily through collection of employee receivables related to giveback obligations and from Carlyle professionals and other non-controlling interests for their portion of the obligation.

This amount is net of $44.7 million related to second Asia buyout fund accruing carry again after payment of a full after-tax clawback in 2016.

Of the $216.1 million in aggregate giveback obligations realized inception to date, $55.6 million was attributable to the Company.

As of December 31, 2021, we have realized $227.9 million in aggregate giveback obligations since inception, which were funded primarily through collection of employee receivables related to giveback obligations and from Carlyle professionals and other non-controlling interests for their portion of the obligation.

This amount is net of $44.7 million related to our second Asia buyout fund accruing carry again after payment of a full after-tax clawback in 2016.

Of the $227.9 million in aggregate giveback obligations realized from inception to December 31, 2021, $62.0 million was attributable to Carlyle.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures—Investment Income.”

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We may need to use or reserve cash to repay such giveback obligations instead of using the cash for other purposes.

Business—Structure and Operation of Our Investment Funds—Incentive Arrangements / Fee Structure” and “Part 1.

“Business—Structure and Operation of Our Investment Funds—Incentive Arrangements / Fee Structure” and Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations—Contingent Obligations (Giveback)” and Notes 2 and 8 to the consolidated financial statements included in this Annual Report on Form 10-K.

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These actions would result in a reduction in management fees we would earn from such investment funds, vehicles, or accounts, and could result in a significant reduction in the expected amounts of total carried interest and incentive fees from those investment funds, vehicles, or accounts.

Carried interest and incentive fees could be significantly reduced as a result of our inability to maximize the value

of investments by an investment fund during the liquidation process or in the event of the triggering of a “giveback” obligation.

Carried interest and incentive fees could be significantly reduced as a result of our inability to maximize the value of investments by an investment fund during the liquidation process or in the event of the triggering of a “giveback” obligation.

Finally, the applicable investment funds, vehicles, or accounts would cease to exist after completion of liquidation and winding-up.

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The AlpInvest funds generally provide for suspension of the investment period if there is a key person event, the right of a supermajority of investors to remove the general partner with cause and, in some cases, without cause, but generally have not provided for liquidation without cause.

The latest generation of Metropolitan funds generally provide for suspension of the investment period if there is a key person event, the right of a supermajority of investors to remove the general partner with or without cause, and the right of a majority of investors to accelerate the liquidation date of the fund without cause by a simple majority vote.

Where AlpInvest and Metropolitan funds include “key person” provisions, they are focused on specific existing AlpInvest or Metropolitan personnel as applicable.

Where AlpInvest funds include “key person” provisions, they are focused on specific existing AlpInvest personnel as applicable.

In addition, because our investment funds generally have an adviser that is registered under the Advisers Act, the management agreements of each of our investment funds would be terminated upon an “assignment” to a third-party of these agreements without appropriate investor consent, which assignment may be deemed to occur in the event these advisers were to experience a change of control.

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In addition, our failure to comply with applicable pay-to-play laws, regulations and/or policies adopted by a number of states and municipal pension funds as well as the New York Attorney General’s Public Pension Fund Reform Code of Conduct, may, in certain instances, excuse a public pension fund investor from its obligation to make further capital contributions relating to all or any part of an investment or allow it to withdraw from the fund.

If a public pension fund investor were to seek to be

excused from funding a significant amount of capital calls for any particular fund or funds, the operation and performance of those funds could be materially and adversely affected.

If a public pension fund investor were to seek to be excused from funding a significant amount of capital calls for any particular fund or funds, the operation and performance of those funds could be materially and adversely affected.

Our failure to deal appropriately with conflicts of interest in our investment business could damage our reputation and adversely affect our businesses.

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Certain of our funds, managed accounts or investment vehicles may have overlapping investment objectives, including co-investment funds and funds that have different fee structures, and potential conflicts may arise with respect to our decisions regarding how to allocate investment opportunities among those funds, managed accounts or investors.

Different funds may invest in a single company, for example where the fund that made an initial investment no longer has capital available to invest or a follow-on opportunity arises.

Different funds may invest in a single company, for example where the fund that made an initial investment no longer has capital available to invest or a follow-on opportunity

We may also cause different funds that we manage to purchase different classes of debt or securities in the same portfolio company.

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Conflicts of interest may also exist in the valuation of our investments and regarding decisions about the allocation of specific investment opportunities among us and our funds and the allocation of fees and costs among us, our investment funds and their portfolio companies and conflicts could also arise in respect of the ultimate disposition of such investments.

Due to recent changes in the tax treatment of carried interest under the TCJA, conflicts of interest may arise with investors in certain of our funds in connection with the general partner’s decisions with respect to the sequence and timing of disposals of investments in such funds.

Due to changes in the tax treatment of carried interest under the TCJA and/or future legislation, conflicts of interest may arise with investors in certain of our funds in connection with the general partner’s decisions with respect to the sequence and timing of disposals of investments in such funds.

To the extent we fail to appropriately deal with any such conflicts, it could negatively impact our reputation and ability to raise additional funds and the willingness of counterparties to do business with us or result in regulatory liability or potential litigation against us.

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The subordinated fees we generate from our CLO business could be negatively impacted if one or more CLOs fail certain tests related to overcollateralization (including the interest diversion test) set forth in their respective indentures.

In the event that worsening credit conditions and/or a deterioration in loan performance generally leads to defaults or downgrades of the CLOs’ underlying collateral obligations, one

or more CLOs could fail one or more overcollateralization tests and/or interest diversion tests.

In the event that worsening credit conditions and/or a deterioration in loan performance generally leads to defaults or downgrades of the CLOs’ underlying collateral obligations, one or more CLOs could fail one or more overcollateralization tests and/or interest diversion tests.

These risks are correlated, as when an underlying collateral obligation defaults or is downgraded below a certain threshold, such collateral obligation is then carried below par for the purpose of overcollateralization and interest diversion testing, making a failure of any such test more likely to occur.

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For example, in the early stages of the COVID-19 pandemic, ratings agencies downgraded certain underlying collateral obligations in our CLOs.

As a result, we did not recognize approximately $7.0 million of subordinated management fees from our CLOs in the first and second quarters of 2020, but recognized such amounts in the third quarter due to improvement in the underlying CLO portfolios.

As a result, we did not recognize approximately $7.0 million of subordinated management fees from our CLOs in the first and second quarters of 2020, but recognized such amounts in the third quarter of 2020 due to improvement in the underlying CLO portfolios.

Underwriting, syndicating and securities placement activities expose us to risks.

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may act as an underwriter, originator, syndicator or placement agent in loan originations.

If we are unable to sell securities or place loans at the anticipated price levels where we act as an underwriter, syndicator or placement agent, we may incur losses and suffer reputational harm.

If we are unable to

sell securities or place loans at the anticipated price levels where we act as an underwriter, syndicator or placement agent, we may incur losses and suffer reputational harm.

As an underwriter, syndicator or placement agent, we also may be subject to potential liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings we underwrite, syndicate or place.

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Moreover, these hedging arrangements may generate significant transaction costs, including potential tax costs, which may reduce the returns generated by the firm or a fund.

See “—Changing regulations regarding derivatives and commodity interest transactions could adversely impact various aspects of our business.”

See “—Risks Related to Our Company—Changing regulations regarding derivatives and commodity interest transactions could adversely impact various aspects of our business.”

Certain of our fund investments may be concentrated in particular asset types or geographic regions, which could exacerbate any negative performance of those funds to the extent those concentrated investments perform poorly.

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and we advise funds that invest in a single industry sector, such as financial services, aviation, and power.

During periods of difficult market conditions, slowdowns, or increased borrower defaults in these sectors or geographic regions, decreased revenue, difficulty in obtaining access to financing and

increased funding costs experienced by our funds may be exacerbated by this concentration of investments, which would result in lower investment returns for our funds.

During periods of difficult market conditions, slowdowns, or increased borrower defaults in these sectors or geographic regions, decreased revenue, difficulty in obtaining access to financing and increased funding costs experienced by our funds may be exacerbated by this concentration of investments, which would result in lower investment returns for our funds.

Such concentration may increase the risk that events affecting a specific geographic region or asset type will have an adverse or disparate impact on such investment funds, as compared to funds that invest more broadly.

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At the same time, supply was affected by the inability of the members of the Organization of Petroleum Exporting Countries (“OPEC”) to agree to crude production curtailments in the first half of 2020.

Together, these phenomena resulted in a large drop in crude oil prices, lower gas prices, and lower refining margins, which continue to be affected by a high level of volatility.

The resultant supply surplus has triggered accumulation of substantial inventories of crude oil and refined products, which are expected to continue to impact energy market fundamentals in the near to medium term.

Political developments, increased supply from new crude oil, gas and alternative low carbon energy sources, technological change, global macroeconomic conditions, public health risks and changes in the influence of OPEC may continue to impact commodity prices going forward and the financial performance of some of our investments.

Our investments that are exposed to energy prices, either are consumers or producers of energy, and their financial performance has been, and is likely to continue to be, affected by the continued volatility in energy prices.

The resultant supply surplus triggered accumulation of substantial inventories of crude oil and refined products.

Together, these phenomena resulted in a large drop in crude oil prices, lower gas prices, and lower refining margins.

In 2021, however, oil and gas prices rebounded sharply and rapidly, as stronger-than-expected demand outpaced sluggish supply;

European consumers and businesses, in particular, face energy supply shortages and high prices heading into 2022.

The European energy situation could further deteriorate in the near- and medium-term if events between Russia, Ukraine and NATO continue to escalate.

In general, political developments, see-sawing supply-demand dynamics, technological change, global macroeconomic conditions, public health risks and changes in the influence of OPEC may continue to impact commodity prices going forward and the financial performance of some of our investments.

Our investments that are exposed to energy prices, either as consumers or producers of energy, and their financial performance has been, and is likely to continue to be, affected by the continued volatility in energy prices.

To the extent that current conditions persist or worsen, there may be adverse impacts on the financial performance of the affected businesses, on the availability of financing or credit to them as well as their asset prices and valuations.

After falling in the first half of 2020, oil prices partially rebounded in the latter half of the year, although they remained more than 20% below their levels at the end of 2019.

Oil prices tend to experience significant volatility in response to macroeconomic trends, trade developments, geopolitical events, and data on inventories, global demand, future supply, and U.S.

dollar strength.

Oil’s partial recovery to date is largely attributable to vaccine optimism, continued OPEC+ production cuts and a softer U.S.

Oil’s strong performance in 2021, ending the year 14% above 2019 levels, is largely attributable to increased demand and persistent global supply discipline.

Prices for oil and natural gas are subject to wide fluctuation in response to relatively minor changes in the supply of and demand for oil and natural gas as well as numerous additional factors such as market uncertainty, speculation, the level of consumer product demand, the refining capacity of oil purchasers, weather conditions, domestic and non-U.S.

governmental regulations, appreciation or depreciation of the U.S.

dollar, the price and availability of alternative fuels, political conditions in the Middle East and Africa, actions of the Organization of Petroleum Exporting Countries, the non-U.S.

dollar, the price and availability of alternative fuels, political conditions in the Middle East, Africa, and Eastern Europe, actions of the OPEC, the non-U.S.

supply of oil and natural gas, U.S.

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In the event that oil prices decline sharply in the future, or fail to sustain upward price momentum, it is possible our portfolio could be adversely impacted.

The new Administration has made climate change a key focus of its international and domestic policy agenda.

It has recently announced a moratorium on new leases on federal lands as well as an executive order aimed at aligning financial flows with its climate policy aimed at lowering greenhouse gas emissions.

The executive order, “Tackling Climate Crisis at Home and Abroad”, issued on January 27, 2021, includes several policy changes to address climate issues.

The current Administration has made climate change a key focus of its international and domestic policy agenda.

It announced a moratorium on new leases on federal lands as well as an executive order aimed at aligning financial flows with its climate policy aimed at lowering greenhouse gas emissions.

The executive order, “Tackling Climate Crisis at Home and Abroad”, issued in January 2021, includes several policy changes to address climate issues.

The goal to conserve 30% of federal lands and waters by 2030 could pose tangential future risks to the operations and profitability of our portfolio companies in certain industries if they result in higher energy or other prices.

On January 25, 2021, the new Administration issued an executive order, “Ensuring the Future Is Made in All of America by All of America’s Workers” which has the potential to impact federal contractors and certain grant and loan recipients and their contractors.

In addition, U.S.

regulatory authorities are increasingly focused on ESG-related practices.

For example, the methodology used by ESG funds for determining socially responsible investments has been a focus area of the SEC, and the current Administration is generally focused on ESG matters.

Climate and environmental impact have also been a focus area of the SEC, and the SEC is expected to propose new rules in this area in the near term.

Further, changing customer or community perceptions related to climate considerations may have a negative impact on our portfolio companies and/or our ability to attract investors in these areas and may adversely affect our reputation.

In addition, technological improvements or innovations that support the transition to a lower-carbon, energy-efficient economic system may increase competition or make it more difficult to attract capital to our energy business.

In January 2021, the current Administration issued an executive order, “Ensuring the Future Is Made in All of America by All of America’s Workers” which has the potential to impact federal contractors and certain grant and loan recipients and their contractors.

While the only immediate impact of the order is the creation of a “Made in America” Office within the Office of Management and Budget (OMB) to review federal agency waiver requests, the longer term impact of potential changes to the Federal Acquisition Regulation (FAR) and statutory exemptions for commercial item information technology and trade agreements and the change in waiver procedures requirements for certain grant and loan programs could impact certain investments.

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Our funds invest in companies in many different industries, each of which is subject to volatility based upon economic and market factors.

During both the global financial crisis and the 2020 COVID-19 crisis, we have experienced significant fluctuations in the fair value of securities held by our funds.

The concomitant recession and recovery in the real economy subsequent to both the global financial crisis and COVID-19 crisis also exerted a significant impact on overall performance activity and the demands for many of the goods and services provided by portfolio companies of the funds we advise.

Although the U.S.

economy appears to have exited the recession induced by the COVID-19 pandemic, the current level of activity remains below its prior peak and many obstacles to continued growth remain, such as a spike in new coronavirus infections, a slow vaccine rollout, geopolitical events, vulnerable credit markets, high levels of public debt, slowing population growth and economic stress outside the U.S.

These factors and other general economic trends are likely to impact the performance of portfolio companies in many industries and in particular, industries that anticipated that global GDP would quickly return to its pre-crisis trend.

During both the 2008 global financial crisis and the ongoing COVID-19 pandemic, we have experienced significant fluctuations in the fair value of securities held by our funds.

The concomitant recession and recovery, or anticipated recovery, in the real economy subsequent to both the 2008 global financial crisis and COVID-19 pandemic also exerted and are expected to exert a significant impact on overall performance activity and the demands for many of the goods and services provided by portfolio companies of the funds we advise.

Although we believe the U.S.

economy has exited the recession induced by the COVID-19 pandemic, obstacles to continued growth remain, such as geopolitical and domestic political uncertainty, high inflation, a sharp shift in monetary policy, depressed labor force participation, high levels of public debt, slowing population growth, supply chain pressures and economic stress outside the U.S.

These factors and other general economic trends can impact the performance of portfolio companies in many industries and geographies.

In addition, the value of our investments in portfolio companies in the financial services industry is impacted by the overall health and stability of the credit and equity markets.

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In addition, the performance of our investment funds and our portfolio companies may be adversely affected by increases in inflationary pressures such as employee wage growth or rising input costs, which could compress profit margins, particularly at our portfolio companies that are unable to effectively increase prices in response.

With respect to real estate, various factors could have an adverse effect on investment performance, including, but not limited to, deflation in consumer prices, a low level of

consumer confidence in the economy and/or the residential real estate market and rising mortgage interest rates.

With respect to real estate, various factors could have an adverse effect on investment performance, including, but not limited to, deflation in consumer prices, a low level of consumer confidence in the economy and/or the residential real estate market and rising mortgage interest rates.

In response to financial difficulties that are currently being experienced or that may be experienced in the future by certain portfolio companies or real estate investments, we may consider legal, regulatory, tax or other factors in determining the steps we may take to support such companies or investments, which may include enhancing the management team or funding additional capital investments from our investment funds, our senior Carlyle professionals and/or us.

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Because of the leverage that we typically employ in our investments, this could cause a substantial decrease in the value of our equity holdings in the portfolio company.

The inaccuracy of financial projections could thus cause us to misstate the values of our fund’s investments and therefore our accrued performance allocations, and ultimately cause our funds’ performance to fall short of our expectations.

The inaccuracy of financial

projections could thus cause us to misstate the values of our fund’s investments and therefore our accrued performance allocations, and ultimately cause our funds’ performance to fall short of our expectations.

Contingent liabilities could harm fund performance.

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In addition, we could suffer legal and reputational damage from such failure to perform if we are then unable to satisfy our obligations under our contracts with third parties or otherwise and could suffer losses in the event we are unable to comply with certain other agreements.

In addition, under certain local clearing and settlement regimes, we or our funds could be subject to settlement discipline fines.

The terms of our contracts with third parties surrounding securities transactions are often customized and complex, and many of these arrangements occur in markets or relate to products that are not subject to regulatory oversight.

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In the event of the insolvency of a party that is holding our assets or those of our funds as collateral, we and our funds may not be able to recover equivalent assets in full as we and our funds will rank among the counterparty’s unsecured creditors.

In addition, our and our funds’ cash held with a prime broker, custodian or counterparty may not be segregated from the prime broker’s, custodian’s or counterparty’s

own cash, and we and our funds therefore may rank as unsecured creditors in relation thereto.

In addition, our and our funds’ cash held with a prime broker, custodian or counterparty may not be segregated from the prime broker’s, custodian’s or counterparty’s own cash, and we and our funds therefore may rank as unsecured creditors in relation thereto.

The inability to recover our or our investment funds’ assets could have a material impact on us or on the performance of our funds.

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Although portfolio companies may maintain insurance to protect against certain risks, where available on reasonable commercial terms (such as business interruption insurance that is intended to offset loss of revenues during an operational interruption), such insurance is subject to customary deductibles and coverage limits and may not be sufficient to recoup all of an investment’s losses.

Furthermore, once infrastructure assets of investments become operational, they may face competition from other infrastructure assets in the vicinity of the assets they operate, the presence of which depends in part on governmental plans and policies, over which we have no control.

Furthermore, once infrastructure assets of investments become operational, they may face competition from other infrastructure assets in the

vicinity of the assets they operate, the presence of which depends in part on governmental plans and policies, over which we have no control.

Infrastructure investments are subject to substantial government regulation and governments have considerable discretion to implement regulations that could affect the business of infrastructure investing.

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Such risks include, without limitation, risks relating to the availability and timely receipt of zoning and other regulatory approvals, the cost and timely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms.

These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once undertaken, any of which could have an adverse effect on the financial condition and results of operations.

These risks could result in

substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once undertaken, any of which could have an adverse effect on the financial condition and results of operations.

Investments in electric utility industries both in the United States and abroad continue to experience increasing competitive pressures, primarily in wholesale markets, as a result of consumer demands, technological advances, greater availability of natural gas and other factors.

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Failure to comply with applicable laws, rules regulations and standards could result in the prevention of operation of certain facilities or the prevention of the sale of such a facility to a third party, as well as the loss of certain rate authority, refund liability, penalties and other remedies, all of which could result in additional costs to a portfolio company and adversely affect the investment results.

In addition, any legislative efforts by the current administration or Congress to overturn or modify policies or regulations enacted by the prior administration that placed limitations on coal and gas electric generation, mining and/or exploration could adversely affect our

alternative energy investments.

Conversely, any governmental policy changes encouraging resource extraction could have the effect of holding down energy prices, which could have a negative impact on certain of our energy investments.

In addition, any legislative efforts by the current administration or Congress to overturn or modify policies or regulations enacted by the prior administration and to place additional limitations on coal and gas electric generation, mining and/or exploration could adversely affect our alternative energy investments.

Investments may not receive the initial regulatory approval or license needed to acquire or otherwise operate an investment, including after substantial costs have been incurred pursuing such investment.

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Conversely, because policies favoring renewable energy initiatives may involve economic disincentives on more carbon-intensive forms of traditional energy generation, such policies may adversely affect other investments that do not involve renewable energy projects.

Investments in the insurance industry (including our investment in Fortitude Re) could be adversely impacted by insurance regulations and potential regulatory reforms.

On June 2, 2020, Carlyle FRL, L.P., an affiliated investment fund (“Carlyle FRL”), acquired a 51.6% interest in Fortitude Holdings.

Fortitude Holdings owns 100% of the outstanding common shares of Fortitude Re.

At closing, we contributed our 19.9% interest in Fortitude Holdings to Carlyle FRL such that Carlyle FRL holds a 71.5% controlling interest in Fortitude Holdings.

Investments in the insurance industry (including our investment in Fortitude) could be adversely impacted by insurance regulations and potential regulatory reforms.

Carlyle FRL, L.P., an affiliated investment fund (“Carlyle FRL”), holds an indirect 71.5% controlling interest in Fortitude Re, inclusive of our 19.9% interest, through its 71.5% controlling interest in Fortitude.

The insurance industry is highly regulated and the regulators in many jurisdictions have broad, and in some cases discretionary, authority over insurance companies, including, among other things, with respect to marketing practices, policy rate increases, reserve requirements, permissible investments and affiliate transactions.

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Even where laws or regulations purport to be the same across different jurisdictions, they may be inconsistently applied by the regulators of the different jurisdictions.

In terms of regulatory changes, the following changes in particular may affect the operations and prospects of our investments in the insurance industry, including Fortitude Re:

In terms of regulatory changes, the following changes in particular may affect the operations and prospects of our investments in the insurance industry, including Fortitude:

(i) changes to interest rates and policies of central banks and regulatory authorities;

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and (vi) developments in financial reporting.

An adverse review or determination by any applicable judicial or regulatory authority of any such law or regulation, or an adverse change in applicable regulatory requirements, judicial or regulatory interpretation, or reimbursement programs, could have a material adverse effect on the operations and/or financial performance of our investments in the insurance industry (including Fortitude Re) and may increase their compliance and legal costs.

An adverse review or determination by any applicable judicial or regulatory authority of any such law or regulation, or an adverse change in applicable regulatory requirements, judicial or regulatory interpretation, or reimbursement programs, could have a material adverse effect on the operations and/or financial performance of our investments in the insurance industry (including Fortitude) and may increase their compliance and legal costs.

Any such costs could negatively impact the value of our investments and the returns we are able to generate on such investments.

Our relationship with Fortitude Holdings may not generate a meaningful contribution to our revenue and our ownership and control of Fortitude Holdings could give rise to real or apparent conflicts of interest.

While we expect to derive a meaningful contribution to our revenue across our business segments from our investment in and strategic asset management relationship with Fortitude Re, as described in “Strategic Investment in Fortitude Re (f/k/a.

DSA Re)” in “Part II.

Item 8 Note 5–Investments,” we may not be successful in doing so.

Pursuant to investment management agreements we have entered into with Fortitude Re and certain AIG-affiliated ceding companies it has reinsured (the “AIG Ceding Companies”), certain of our subsidiaries receive performance fees and/or management fees from carry funds and separately managed accounts that Fortitude Re and the AIG Ceding Companies invest in.

Through its subsidiaries, the Company managed or advised $4.7 billion of capital attributable to investments made under these investment management agreements, as of December 31, 2020.

Our investment management agreements with Fortitude Re and the AIG Ceding Companies are terminable under certain circumstances.

Our relationship with Fortitude may not generate a meaningful contribution to our revenue and our indirect controlling ownership of Fortitude could give rise to real or apparent conflicts of interest.

Item 8, “—Investments—Strategic Investment in Fortitude,” we may not be successful in doing so.

Pursuant to investment management agreements into which we have entered with Fortitude Re and certain companies with which it has reinsurance agreements (the “Ceding Companies”), certain of our subsidiaries receive performance fees and/or management fees from carry funds and separately managed accounts into which Fortitude Re and the Ceding Companies invest.

Through its subsidiaries we managed or advised $7.0 billion of capital attributable to investments made under these investment management agreements, as of December 31, 2021.

Our investment management agreements with Fortitude Re and the Ceding Companies are terminable under certain circumstances.

If such investment management agreements were terminated, it could have a material adverse effect on our business, results of operations and financial condition.

There can be no assurance that the benefit we receive from Fortitude Re will not decline due to a disruption or decline in Fortitude Re’s business or a change in our relationship with Fortitude Re, including our investment income from our indirect interest in Fortitude Holdings and/or investment management agreements with Fortitude Re and the AIG Ceding Companies.

We may be unable to replace a decline in the revenue derived from investments made in our funds and entities by Fortitude Re and/or the AIG Ceding Companies on a timely basis if our relationship with Fortitude Re were to change or if Fortitude Re were to experience a material adverse impact to its business.

Carlyle FRL owns a controlling interest in Fortitude Holdings and has the right to appoint a majority of its board of directors.

As a result, there may be real or apparent conflicts of interest with respect to matters affecting the Company, Carlyle-managed funds and their portfolio companies and Fortitude Holdings, including with respect to the fiduciary duties that our employees that are board members owe to Fortitude Holdings in addition to the duties that they have to the Company.

In addition, conflicts of interest could arise with respect to transactions involving business dealings between the Company, Fortitude Holdings and each of their respective affiliates.

Our Investment Solutions business is subject to additional risks.

Our Investment Solutions business is subject to additional risks, including the following:

• The Investment Solutions business is subject to business and other risks and uncertainties generally consistent with our business as a whole, including without limitation legal, tax and regulatory risks, the avoidance or management of conflicts of interest and the ability to attract and retain investment professionals and other personnel, and risks associated with the acquisition of new investment platforms.

• Pursuant to our current arrangements with the various businesses, we currently restrict our participation in the investment activities undertaken by our Investment Solutions segment (including with respect to AlpInvest and Metropolitan), which may in turn limit our ability to address risks arising from their investment activities.

For example, although we maintain ultimate control over AlpInvest and Metropolitan, their management teams (who are our employees) continue to exercise independent investment authority without involvement by other Carlyle personnel.

For so long as these arrangements are in place, we will observe substantial restrictions on our ability to access investment information or engage in day-to-day participation in the AlpInvest and Metropolitan investment businesses, including a restriction that AlpInvest and Metropolitan investment decisions are made and maintained without involvement by other Carlyle personnel and that no specific investment data, other than data on the investment performance of its investment funds and managed accounts, will be shared.

Generally, we have a reduced ability to identify or respond to investment and other operational issues that may arise within the Investment Solutions business, relative to other Carlyle investment funds.

• Similar to other parts of our business, Investment Solutions is seeking to broaden its investor base by raising funds and advising separate accounts for investors on an account-by-account basis and the number and complexity of such investor mandates and fund structures has increased as a result of continuing fundraising efforts, and the activation of mandates with existing investors.

• Conflicts may arise between such Investment Solutions funds or separate managed accounts (e.g., competition for investment opportunities), and in some cases conflicts may arise between an Investment Solutions fund or managed account and a Carlyle fund.

There can be no assurance that the benefit we receive from Fortitude Re will not decline due to a disruption or decline in Fortitude’s business or a change in our relationship with Fortitude, including our investment income from our indirect interest in Fortitude and/or investment management agreements with Fortitude Re and the Ceding Companies.

We may be unable to replace a decline in the revenue derived from investments made in our funds and entities by Fortitude Re and/or the Ceding Companies on a timely basis if our relationship with Fortitude were to change or if Fortitude were to experience a material adverse impact to its business.

Carlyle FRL owns a controlling interest in Fortitude and has the right to appoint a majority of its board of directors.

As a result, there may be real or apparent conflicts of interest with respect to matters affecting the Company, Carlyle-managed funds and their portfolio companies and Fortitude, including with respect to the fiduciary duties that our employees that are board members owe to Fortitude in addition to the duties that they have to the Company.

In addition, conflicts of interest could arise with respect to transactions involving business dealings between the Company, Fortitude and each of their respective affiliates.

The foregoing conflicts of interest may also arise with respect to subsidiaries of Fortitude, such as Fortitude Re, where Carlyle FRL owns an indirect controlling interest and has the right to appoint a majority of its board of directors.

Our Global Investment Solutions business is subject to additional risks.

Our Global Investment Solutions business is subject to additional risks, including the following:

• The Global Investment Solutions business is subject to business and other risks and uncertainties generally consistent with our business as a whole, including without limitation legal, tax and regulatory risks, the avoidance or management of conflicts of interest and the ability to attract and retain investment professionals and other personnel, and risks associated with the acquisition of new investment platforms.

• Pursuant to our current arrangements with the various businesses, we currently restrict our participation in the investment activities undertaken by our Global Investment Solutions segment (including with respect to AlpInvest), which may in turn limit our ability to address risks arising from their investment activities.

For example, although we maintain ultimate control over AlpInvest, its management team (who are our employees) continue to exercise independent investment authority without involvement by other Carlyle personnel.

For so long as these arrangements are in place, we will observe substantial restrictions on our ability to access investment information or engage in day-to-day participation in the AlpInvest investment businesses, including a restriction that AlpInvest investment decisions are made and maintained without involvement by other Carlyle personnel and that no specific investment data, other than data on the investment performance of its investment funds and managed accounts, will be shared.

Generally, we have a reduced ability to identify or respond to investment and other operational issues that may arise within the Global Investment Solutions business, relative to other Carlyle investment funds.

• Similar to other parts of our business, Global Investment Solutions is seeking to broaden its investor base by raising funds and advising separate accounts for investors on an account-by-account basis and the number and complexity of such investor mandates and fund structures has increased as a result of continuing fundraising efforts, and the activation of mandates with existing investors.

• Conflicts may arise between such Global Investment Solutions funds or separate managed accounts (e.g., competition for investment opportunities), and in some cases conflicts may arise between an Global Investment Solutions fund or managed account and a Carlyle fund.

In addition, certain managed accounts may have different or heightened standards of care, and if they invest in other investment funds sponsored by us could result in lower management fees and carried interest to us than Carlyle’s typical investment funds.

• Our Investment Solutions business is separated from the rest of the firm by an informational wall designed to prevent certain types of information from flowing from the Investment Solutions platform to the rest of the firm.

• Our Global Investment Solutions business is separated from the rest of the firm by an informational wall designed to prevent certain types of information from flowing from the Global Investment Solutions platform to the rest of the firm.

This information barrier limits the collaboration between our investment professionals with respect to specific investments.

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In addition, the holders of these shares have the benefit of registration rights agreements with us.

See “Item 13.

Certain Relationships and Related Person Transactions—Registration Rights Agreements.” Moreover, as holders of freely tradable common stock rather than Carlyle Holdings units, the Former Private Unitholders will be now able to more easily sell shares of common stock into the market (or donate shares of common stock to charities which in turn may sell these into the market) than was the case before the Conversion.

Moreover, as holders of freely tradable common stock rather than Carlyle Holdings units, the Former Private Unitholders are now able to more easily sell shares of common stock into the market (or donate shares of common stock to charities which in turn may sell these into the market) than was the case before the Conversion.

For example, the Former Private Unitholders are no longer subject to restrictions that in most cases limited their ability to exchange Holdings Units for common units to prescribed quarterly exchange dates.

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Subject to the restrictions described below, we may issue and sell in the future additional shares of common stock.

Since our initial public offering, we have issued 4,500,000 shares of common stock in primary offerings and have granted 73,372,573 restricted stock units as of December 31, 2020.

The issuance of additional equity securities or securities convertible into equity securities would also result in dilution of our existing stockholders’ equity interest.

The issuance of the additional shares of common stock, the sale of shares of common stock by our significant stockholders and the vesting and sale of restricted stock units or the perception that such sales may occur could cause the market price of our common stock to decline.

Under our Equity Incentive Plan, we have granted 73,372,573 restricted stock units as of December 31, 2020.

Additional shares of common stock will be available for future grant under our Equity Incentive Plan, which plan provides for automatic annual increases in the number of shares of common stock available for future issuance.

We have filed several registration statements and intend to file additional registration statements on Form S-8 under the Securities Act to register shares of common stock or securities convertible into or exchangeable for common stock issued or available for future grant under our Equity Incentive Plan (including pursuant to automatic annual increases).

Under our Equity Incentive Plan, we had 14,775,651 unvested restricted stock units outstanding as of December 31, 2021.

In June 2021, our stockholders approved an amended and restated Equity Incentive Plan pursuant to which we may issue up to 16,000,000 awards.

As of December 31, 2021, the total number of shares of common stock available for grant under the amended and restated Equity Incentive Plan was 15,636,767.

We have filed several registration statements and intend to file additional registration statements on Form S-8 under the Securities Act to register shares of common stock or securities convertible into or exchangeable for common stock issued or available for future grant under our amended and restated Equity Incentive Plan when applicable.

Any such Form S-8 registration statement will automatically become effective upon filing.

Accordingly, common stock registered under such registration statement will be available for sale in the open market.

Morgan Stanley, our equity plan service provider, may, from time to time, act as a broker, dealer, or agent for, or otherwise facilitate sales in the open market through block transactions or otherwise of our common stock on behalf of, plan participants, including in connection with sales of shares of common stock to fund tax obligations payable in connection with the vesting of awards under our Equity Incentive Plan.

in connection with sales of shares of common stock to fund tax obligations payable in connection with the vesting of awards under our amended and restated Equity Incentive Plan.

The market price of our common stock may be volatile, which could cause the value of your investment to decline.

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This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating performance.

In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends to common stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries in which we participate or individual scandals, and in response the market price of our common stock could decrease significantly.

In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends to common stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries in which we participate or individual scandals, the COVID-19 pandemic, general market conditions and other events or occurrences, and in response the market price of our common stock could decrease significantly.

You may be unable to resell your common stock at or above the price you paid for them.

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Carlyle Group Management L.L.C.

controls us and its interests may conflict with ours or yours in the future.

Carlyle Group Management L.L.C., which is wholly owned and controlled by our founders and other senior Carlyle professionals, holds approximately 57.8% of the voting power of our common stock pursuant to an irrevocable proxy granted to it by senior Carlyle professionals and certain other former limited partners of Carlyle Holdings who became holders of shares of common stock in connection with the Conversion.

has significant influence over us and its interests may conflict with ours or yours.

Carlyle Group Management L.L.C., which is wholly owned and controlled by our founders and other senior Carlyle professionals, holds approximately 43% of the voting power of our common sto ck as of December 31, 2021 pursuant to an irrevocable proxy granted to it by senior Carlyle professionals and certain other former limited partners of Carlyle Holdings who became holders of shares of common stock in connection with the Conversion.

For so long as Carlyle Group Management L.L.C.

continues to have voting power over a significant percentage of our common stock, even if such amount is less than 50%, it will still be able to significantly influence the composition of our Board of Directors and the approval of actions requiring stockholder approval.

continues to have voting power over a significant percentage of our common stock, even though such amount is less than 50%, it will still be able to significantly influence the composition of our Board of Directors and the approval of actions requiring stockholder approval.

Accordingly, for such period of time, Carlyle Group Management L.L.C.

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continues to own a significant percentage of our common stock, it will be able to cause or prevent a change of control of our company or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of our company.

The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

We are a “controlled company” and as a result rely on, and intend to continue to rely on, exceptions from certain corporate governance requirements under the rules of Nasdaq.

We are a “controlled company” and qualify for exceptions from certain corporate governance and other requirements of the rules of Nasdaq.

The concentration of ownership could delay or deter possible changes in control of our company and could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

The interests of Carlyle Group Management L.L.C.

may not coincide with our interests or the interests of other holders of our common stock.

We are transitioning from a “controlled company” to no longer being a “controlled company” within the meaning of the rules of Nasdaq and the SEC.

However, even though we are no longer a “controlled company”, we will continue to qualify for, and as a result rely on, exceptions from certain corporate governance requirements under the rules of Nasdaq during a one-year transition period.

Prior to August 5, 2021, we were a “controlled company” and qualified for exceptions from certain corporate governance and other requirements of the rules of Nasdaq.

Pursuant to these exceptions, controlled companies may elect not to comply with certain corporate governance requirements of Nasdaq, including the requirements (1) that a majority of our Board of Directors consist of independent directors, (2) that we have a compensation committee that is composed entirely of independent directors, (3) that the compensation committee be required to consider certain independence factors when engaging compensation consultants, legal counsel and other committee advisors, and (4) that we have independent director oversight of director nominations.

We have elected to avail ourselves of these exceptions.

We have availed ourselves of these exceptions in the past and continue to rely on certain of these exceptions as permitted by the rules of Nasdaq.

Accordingly, our stockholders generally do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

As of August 5, 2021, Carlyle Group Management L.L.C.’s ownership of our common stock decreased below 50% of our outstanding common stock and, as of such date, we ceased to be a “controlled company” under Nasdaq rules.

However, even though we are not a "controlled company," we will continue to be able to rely on certain of the foregoing exemptions from certain corporate governance requirements during a one-year transition period.

The Nasdaq rules require that our Board be composed of a majority of "independent directors", as defined under the rules of Nasdaq, and that our compensation committee and our nominating and corporate governance committee consist entirely of independent directors, by August 5, 2022.

If we fail to meet the above deadlines for these requirements, our common stock could be delisted from Nasdaq, which would negatively impact the trading of our common shares and our business and financial condition.

In addition, as we transition to a non-controlled company, we may incur additional corporate governance and other compliance costs, including increased director compensation for additional independent directors and expanded governance committees.

Our founders have the right to designate members of our Board of Directors.

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These persons also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to the Company.

In addition, these persons may have an interest in our

pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to our common stockholders.

In addition, these persons may have an interest in our pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to our common stockholders.

Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

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in its wholly owned subsidiaries or the general partner interests of these wholly owned subsidiaries in the Carlyle Holdings partnerships are investment securities.

Moreover, because we believe that the capital interests of the general partners of our funds in their respective funds are neither securities nor investment securities, we believe that less than 40% of The Carlyle Group Inc.’s total assets (exclusive of U.S.

Moreover, because we believe that the capital interests of the general partners of our funds in their respective funds are neither securities nor investment securities, we believe

that less than 40% of The Carlyle Group Inc.’s total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis are composed of assets that could be considered investment securities.

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In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting as required by the Exchange Act, significant resources and management oversight are required.

We have implemented procedures and processes for the purpose of

addressing the standards and requirements applicable to public companies.

We have implemented procedures and processes for the purpose of addressing the standards and requirements applicable to public companies.

The VIEs that we consolidate as the primary beneficiary are, subject to certain transition guidelines, included in our annual assessment of the effectiveness of our internal control over financial reporting under the Sarbanes-Oxley Act.

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Risks Related to Taxation

Comprehensive U.S.

federal income tax reform became effective in 2018, which could adversely affect us as it is implemented.

On December 22, 2017, the TCJA was signed into law, which has resulted in fundamental changes to the Code.

Some of the key elements of the TCJA include (i) the reduction of the corporate tax rate from 35% to 21%, (ii) new limitations on the utilization, carryback and carryforward of net operating losses, (iii) partial limitations on the deductibility of business interest expense, (iv) certain modifications to Section 162(m) of the Code and (v) general changes to the taxation of corporations and businesses, including modifications to cost recovery rules and changes relating to the scope and timing of U.S.

taxation on earnings from international business operations.

Generally we expect the reduction in the corporate tax rate to result in reduction in our effective tax rate on the portion of our income that was subject to U.S.

corporate income tax prior to the Conversion;

however, following the Conversion, we expect to pay more corporate tax on an overall basis, despite the reduction in the corporate tax rate, as all of our income will be subject to U.S.

federal income tax.

See “—We expect to pay more corporate income taxes than we would have as a limited partnership prior to the Conversion.”

In addition, the TCJA expanded the definition of companies that could be treated as controlled foreign corporations (“CFCs”) which could result in more of our foreign portfolio companies being treated as CFCs.

This could result in unintended tax implications with respect to the treatment and timing of U.S.

taxation of earnings from our investments in certain foreign portfolio companies.

While additional guidance has been and continues to be issued with respect to the legislation, there are still a number of areas which need additional guidance or technical corrections.

There can be no assurance that needed technical clarifications or other legislative changes to provide unintended or unforeseen adverse tax consequences will be enacted by Congress or provided by Treasury and the IRS.

We continue to monitor the impacts, but there will likely be additional compliance costs, which may impact the results of our operations and cash flows.

Many states and localities may not be in full conformity with the U.S.

tax proposals, which may also result in additional costs and tax burden.

Changes in U.S.

and foreign tax regulations could adversely affect our ability to raise funds from certain foreign investors.

Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could negatively impact our effective tax rate and tax liability.

Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties.

These laws, regulations and treaties are complex, and the manner which they apply to us and our funds is sometimes open to interpretation.

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.

Although management believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities, the

tax authorities could challenge our interpretation, resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate.

There may be changes in tax laws or interpretations of tax laws (possibly with retrospective effect) in jurisdictions in which we operate, are managed, are advised, are promoted or invest.

In particular, both the level and basis of taxation may change.

Changes to taxation treaties or interpretations of taxation treaties between one or more such jurisdictions and the countries through which we hold investments, or the introduction of, or change to, EU directives may adversely affect our ability to efficiently realize income or capital gains and to efficiently repatriate income and capital gains from the jurisdictions in which they arise.

Furthermore, the COVID-19 pandemic could prompt governments to increase taxes to fund relief measures, and/or assert taxing jurisdiction on account of remote working conditions.

Consequently, it is possible that we may face unfavorable tax treatment that may materially adversely affect the value of our investments or the feasibility of making investments in certain countries.

This could significantly affect returns to investors, cause us to revalue our net deferred tax assets and/or have a material change to our effective tax rate and tax liabilities.

For example, the TCJA, and guidance interpreting the TCJA since its enactment in 2017, have resulted in many significant changes to the U.S.

federal income tax laws, some of which could adversely impact us and/or our portfolio companies, including changes to the taxation of carried interest, changes to the deductibility of certain interest expense and compensation, limitations on the utilization of net operating losses, and changes relating to the scope and timing of U.S.

taxation of earnings from international operations (including through an expanded definition of “controlled foreign corporations,” introduction of a minimum tax on “global intangible low-taxed income” (“GILTI”), and changes to the creditability of foreign taxes).

Further, foreign, state and local governments may enact tax laws in response to the TCJA that could result in further changes to foreign, state and local taxation and have a material adverse effect on our results of operations, financial condition and cash flow.

The 2020 U.S.

presidential and congressional elections (and future elections) could result in additional fundamental changes in tax law and regulations.

While the likelihood and nature of any such legislation or regulations going into effect is uncertain, the U.S.

Congress and the Biden administration have proposed and may pursue tax policy changes.

For example, the proposed legislation in the Build Back Better Act, which was passed by the U.S.

House of Representatives on November 19, 2021, would impose a 15% minimum tax on book income for corporations with profits over $1 billion, change the GILTI and foreign tax credit regimes, impose a 1% excise tax on certain stock repurchases, further limit compensation deductions under Section 162(m) of the Code, reduce the deduction for “foreign-derived intangible income,” and create a new limitation on interest deductions, among other things.

Any such tax changes could materially increase the amount of taxes we, our portfolio companies, our investors, or our employees and other key personnel would be required to pay.

International tax developments may also significantly impact us.

Pursuant to the Organisation for Economic Co-operation and Development’s (the “OECD”) base erosion and profit shifting (“BEPS”) Project, many individual jurisdictions have introduced domestic legislation implementing certain of the BEPS action points.

Several of the areas of tax law (including double taxation treaties) on which the BEPS Project focuses are relevant to our ability to efficiently realize income or capital gains and to efficiently repatriate income and capital gains from the jurisdictions in which they arise and, depending on the extent to and manner in which relevant jurisdictions have implemented (or implement, as the case may be) changes in those areas of tax law (including double taxation treaties), our ability to do those things may be adversely impacted.

Many of the jurisdictions in which we will make investments have now ratified, accepted and approved the OECD’s Multilateral Instrument which brings into force a number of relevant changes to double tax treaties within scope.

While these changes continue to be introduced, there remains uncertainty as to whether and, if so, to what extent we may benefit from the protections afforded by such treaties and whether our funds may look to their partners in order to derive tax treaty or other benefits.

This position is likely to remain uncertain for a number of years.

In addition, the EU has adopted (and subsequently extended) an Anti-Tax Avoidance Directive (the “ATAD rules”), which directly implements some of the BEPS Project action points within EU law and requires EU Member States to transpose the ATAD rules into their domestic laws.

The most recent provisions of the ATAD rules to come into effect were rules targeting reverse hybrids, which generally apply from January 1, 2022.

The ATAD rules and the domestic laws which implement them are extensive, complex and could apply to a wide range of scenarios.

We are also still waiting for the issuance of guidance from several countries.

These rules could have an adverse tax impact on our firm, funds, investors and/or our portfolio companies.

On December 22, 2021, the European Commission issued a proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes within the EU (the “Unshell Proposal”).

While the Unshell Proposal is expected to be adopted and published into EU member states’ national laws by 30 June 2023, and to come into effect as of 1 January 2024, there is considerable uncertainty surrounding the development of the proposal and its implementation.

proposal could result in additional tax costs and/or reporting and disclosure obligations (which could result in increased administrative and compliance costs) for our entities.

The OECD is also working on proposals, commonly referred to as “BEPS 2.0”, which, if implemented, would fundamentally change the international tax system.

The proposals are based on two “pillars” involving the reallocation of taxing rights (Pillar One) and a new global minimum corporate tax rate (Pillar Two).

Under Pillar One, multinational enterprises (“MNEs”) with an annual global turnover of at least EUR 20 billion will be subject to rules allocating 25% of profits in excess of a 10% profit margin to the jurisdictions within which they carry on business (subject to threshold rules).

MNEs carrying on specific low-risk activities are excluded, including “regulated financial services” (yet to be defined).

Pillar Two imposes a minimum effective tax rate of 15% on MNEs that have consolidated revenues of at least EUR 750 million in at least two out of the last four years .

Pillar Two introduces two related tax measures (the “GloBE” rules):

the income inclusion rule (“IIR”) imposes a top up tax on a parent entity where a constituent member of the MNE group has low-taxed income while the undertaxed payment rule (“UTPR”) applies to intra-group payments if the constituent member’s income is not taxed by an IIR.

Additionally, a subject to tax rule (“STTR”) will permit source jurisdictions to impose limited withholding taxes on low-taxed related party payments, which will be creditable against the GloBE rules tax liability.

Specified classes of entities which are typically exempt from tax are outside the scope of Pillar Two, including investment funds and real estate investment vehicles (as respectively defined) which are the ultimate parent entity of the MNE group (and certain holding vehicles of such entities).

The implementation of the Pillar One and Pillar Two proposals is scheduled for 2023, with the UTPR coming into effect in 2024.

On December 20, 2021, the OECD released Pillar Two model rules providing a template for jurisdictions to translate the GloBE rules into domestic law (and in this respect the EU Commission, on December 22, 2021, issued a proposal for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the EU), although much more detail (including implementation details on Pillar One) is still awaited.

Subject to the development and implementation of both Pillar One and Pillar Two (including the related EU Council Directive proposal and the details of any domestic legislation, double taxation treaty amendments and multilateral agreements which are necessary to implement them), effective tax rates could increase for our firm, funds, portfolio companies and investors.Tax laws, regulations or treaties newly enacted or enacted in the future may cause us to revalue our net deferred tax assets and have a material change to our effective tax rate and tax liabilities.

The Netherlands continued to provide additional updates to its withholding tax on dividends.

Conditional withholding tax on dividends will be introduced as of 2024.

A draft bill, including amendments, on a proposed dividend withholding tax exit charge has been presented to parliament.

If the bill is accepted, it would be retroactively effective December 8, 2021.

We are evaluating and monitoring the impact of these changes which could result in additional withholding on certain payments for us and our investment funds.

and foreign tax regulations could adversely affect our ability to raise funds from certain foreign investors and increase compliance costs.

Under the U.S.

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withholding taxes.

In connection with this regulation, various foreign governments have entered into intergovernmental agreements (“IGAs”) with the U.S.

The reporting obligations imposed under FATCA require FFIs to enter into agreements with the IRS to perform due diligence and to disclose through reporting information about certain account holders and investors to the IRS (or in the case of certain FFIs that are resident in a jurisdiction that has entered into an IGA to implement this legislation, the FFIs would comply with revised diligence and reporting obligations of such IGA).

In connection with this law, various foreign governments have entered into intergovernmental agreements (“IGAs”) with the U.S.

The reporting obligations imposed under FATCA require FFIs to enter into agreements with the IRS to perform due diligence and to report information about certain account holders and investors to the IRS (or in the case of certain FFIs that are resident in a jurisdiction that has entered into an IGA to implement this legislation, to comply with the diligence and reporting obligations of such IGA).

Additionally, certain non-U.S.

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Other countries, such as Luxembourg, the United Kingdom and the Cayman Islands, have implemented and are participating in a multi-jurisdictional regime known as the Common Reporting Standard (“CRS”), which is similar to that of FATCA (without the withholding requirement), and in some cases, have imposed penalties on non-compliant institutions.

Compliance under these and similar regimes as described above could result in increased administrative and compliance costs for our investment entities and, in some cases, could subject our investment entities to increased withholding taxes.

In addition, as part of the TCJA, any gain recognized by a non-U.S.

holder on the sale or exchange of a partnership interest may be treated as income effectively connected with the conduct of a U.S.

trade or business (“ECI”) and therefore subject to U.S.

tax to the extent that such non-U.S.

holder would have been allocated ECI if the partnership sold all of its assets at fair market value as of the date of the sale or exchange.

The TCJA includes a provision effective after December 31, 2017 requiring the transferee of an interest in a partnership that is engaged in a U.S.

trade or business to withhold 10 percent of the transferor’s amount realized (gross purchase price) on the sale, exchange or other disposition of such partnership interest, unless an applicable non-foreign person affidavit is furnished by the transferor or another exception applies.

Final regulations were released in 2020 and are effective for transactions on or after January 29, 2021.

Compliance under such regulations may have an adverse impact on our secondaries business.

Rules have been and continue to be introduced (in particular pursuant to the EU “Directive on Administrative Co-Operation, or “DAC6”, and the OECD’s model Mandatory Disclosure Rules) which require the reporting to tax authorities of information about certain types of arrangement, including arrangements which may circumvent the CRS.

Compliance under these and

similar regimes as described above could result in increased administrative and compliance costs for our investment entities and, in some cases, could subject our investment entities to increased withholding taxes.

We expect to pay more corporate income taxes than we would have as a limited partnership prior to the Conversion.

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is subject to U.S.

federal (and state and local) corporate income taxes, which we anticipate will have a dilutive impact to Distributable Earnings per share of common stock and net income and reduce the amount of cash available for dividends to our common stockholders, although this dilution should initially be partially mitigated by a tax basis increase related to the Conversion.

federal (and state and local) corporate income taxes, which we anticipate will continue to have a dilutive impact to Distributable Earnings per share of common stock and net income and reduce the amount of cash available for dividends to our common stockholders.

Prior to the Conversion, only a portion of the income attributable to us was subject to U.S.

federal, state and local corporation income taxes.

We anticipate that our Distributable Earnings will be subject to an effective corporate tax rate in the mid-to-high teens for several years following the Conversion and in the low-twenties over the long-term.

These estimates are presented for illustrative purposes only and are subject to various risks and uncertainties.

Actual results could differ materially from these estimates.

Among other things, these estimates are based on assumptions concerning the size and recovery period of the tax basis increase related to the Conversion, as well as the currently enacted maximum U.S.

federal corporate income tax rate of 21%.

To the extent the tax basis increase generated in the Conversion is smaller or takes longer to realize than anticipated, we would expect the effective tax rate on Distributable Earnings to more quickly reach its long-term level.

In addition, any future increase in currently enacted corporate tax rates would cause us to pay more corporate income taxes than currently anticipated.

The impact of changes to tax legislation may also cause us to pay more corporate income taxes than currently anticipated.

The additional corporate income tax we pay as a result of the Conversion could grow if currently enacted corporate tax rates increase or changes to tax law otherwise cause us to pay more corporate income taxes.

UNRESOLVED STAFF COMMENTS

Our principal executive offices are located in leased office space at 1001 Pennsylvania Avenue, NW, Washington, D.C.

We also lease the space for our other 25 offices.

We do not own any real property.

We consider these facilities to be suitable and adequate for the management and operation of our business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors