Risk Factors Update Summary

• AIFMD II introduces more onerous delegation requirements, enhanced substance requirements, and additional liquidity management provisions for AIFMs managing open-ended AIFs.
• Increased investment in CLOs from $193 million to $214.1 million in management fees.
• Management fees for CTAC are now due monthly in arrears at an annual rate of 1.75%.
• Increased competition in asset management business, including private equity, hedge funds, and specialized funds, may negatively impact fund performance.
• Global merger and acquisition volume decreased by 36% to $2.1 trillion in 2023.
• Expansion into new investment strategies, geographic markets, and businesses may adversely affect financial condition. This change might result in decreased revenue and increased liabilities.
• Carlyle Japan Equity Management LLC registered as a Financial Instruments Business Operator in Japan.
• Increase in shares available for issuance under Equity Incentive Plan from 27.3 million to 39.8 million.
• Addition of AI Technologies poses risks due to potential misuse, data inaccuracy, and cybersecurity threats.
• The company expects to allocate approximately 60% to 70% of performance to employees.
• Raised $118 billion in new capital commitments in the last three years, with $2.0 billion additional third-party capital raised in 2023.
• Fortitude Re and Fortitude International Re are now classified as insurers in Bermuda.
• Intend to monitor any developments in jurisdictions. Addition of "any" increases the scope of monitoring.
• AIFMD II imposes significant new requirements for funds originating loans, including new restrictions on fund structures and leverage limits for funds with material loan activities.
• Change in ownership interest from 71.5% to 38% in Fortitude Re, impacting revenue.
• CEO holding 6,532,880 unvested restricted stock units, inclusive of dividend equivalent units.
• Addition of "risk of" to litigation and regulatory proceedings highlights increased legal exposure. This change may lead to higher legal costs and potential financial losses.
• New SEC rule finalized in July 2023 mandates disclosure of cybersecurity incidents by public companies.
• The UK's Financial Services and Markets Act 2023 overhaul post-Brexit may lead to increased operational burden and compliance costs due to diverging regulatory regimes.
• Transition from "ESG" to "sustainability" reporting may impact risk exposure. This change could affect the company's reputation and risk profile.
• Proposed SEC rule in February 2024 could increase compliance costs and regulatory liability for investment advisers.
• The DEI Incentive Awards program granted approximately $2 million in awards annually.
• AIFMD II introduces new conditions for non-EEA AIFMs to access EEA private placement regimes, potentially limiting capital raising from EEA investors.
• Potential regulatory action or litigation due to conflicts of interest could harm reputation and ability to raise funds.
• The Corporate Sustainability Reporting Directive (CSRD) strengthens sustainability reporting rules, requiring detailed reports from 2024, impacting financial statements and returns.
• Changes in benchmark rates like LIBOR may result in financial market disruptions, affecting borrowing costs and potentially leading to litigation risks.
• AlpInvest Partners Pte Limited to receive a capital markets license with the Monetary Authority of Singapore.
• Seeking an investment advisory license for AlpInvest Partners in Hong Kong. License expected in Q1 2024.
• Increased scrutiny on sustainability matters may lead to significant litigation risks. This change could result in legal liabilities and reputational damage.
• Global Investment Solutions business subject to additional risks, including industry-specific challenges. This change could impact investment performance and financial stability.
• Potential conflict of interest due to significant influence of Carlyle Group Management L.L.C.
• Changes in debt financing markets and challenging conditions could impact asset values negatively. This change might result in decreased investment opportunities and lower income.
• Transition risks from regulatory reforms may increase costs and impact investments.
• Enhanced scrutiny on insurance industry involvement may lead to regulatory actions.
• The company provided over 600 philanthropic gifts in 2023, supporting over 230 nonprofit organizations.
• Solvency II amendments may indirectly impact the company's business, with proposed changes under review by the EU legislative process.
• Introduction of outbound investment screening regime by the U.S. Department of the Treasury may limit certain investments.
• Changes in tax laws could impact effective tax rate, tax liability, and fund performance.
• Investment into CLOs involves certain risks, indicating potential financial exposure. This change may lead to fluctuations in investment returns and increased risk.
• Carlyle Mauritius Investment Advisor holds a "Qualified Foreign Institutional Investor" license from China.
• SEC amendments in September 2023 require funds to invest 80% of assets in line with ESG factors.
• Risks in aviation leasing industry due to geopolitical events, such as the war in Ukraine.
• Consolidation of investment funds may create operational risks and impact Company performance.
• Ongoing trade negotiations and regulatory reforms may adversely affect profitability, business sectors, and operations.
• Increased regulatory focus on private fund advisers could lead to additional burdens and expenses.
• The company continued the DEI Leadership Network to improve recruitment and retention.
• Increased interest rates may negatively impact real estate prices, debt financing availability, and fund performance.
• SEC proposed rules in July 2023 aim to eliminate conflicts of interest related to AI technologies.
• Anti-takeover provisions in organizational documents and Delaware law may discourage acquisition attempts.
• The company launched MentorcliQ, a platform for personalized mentoring experiences.
• Changes to Form PF reporting requirements could increase compliance costs and regulatory scrutiny.
• Risks associated with valuation methodologies could lead to misstated fund performance and accrued allocations.
• OECD's BEPS 2.0 proposals could fundamentally change international tax system, impacting the Company.
• The company introduced a Wellbeing Month with activities focused on physical, emotional, and financial well-being.