10-K: Carlyle Group Reports Strong AUM Growth, Increased Deployment in 2025

Carlyle Group saw its Assets Under Management grow 8% to $477 billion in 2025, driven by significant inflows and increased investment deployment across its global private equity, credit, and AlpInvest segments.

Summary

• Assets under management (AUM) increased 8% to $477 billion as of December 31, 2025, from $441 billion as of December 31, 2024.
• Inflows totaled $53.7 billion during 2025, a 32% increase from 2024, with over $7 billion in evergreen wealth products.
• The company deployed $54.5 billion across its platform in 2025, a more than 25% increase over 2024, and realized proceeds of $34.1 billion for its carry fund investors.
• Dividends of $505 million were paid to common shareholders in 2025, and $400 million was used to repurchase 7.5 million shares of common stock.
• Global Private Equity (GPE) realized proceeds of $18.2 billion and deployed $10.4 billion in 2025, with notable IPOs including Orion Breweries, Hexaware, and Medline.
• Global Credit (GC) AUM grew 10% year-over-year to $211 billion, driven by $28.3 billion in inflows and $29.9 billion in deployment, including 39 CLOs priced and nine new CLO issuances.
• Carlyle AlpInvest AUM increased 20% year-over-year to $102 billion, with $17.9 billion of inflows primarily from secondaries & portfolio finance, CAPM, and newly launched CAPS funds.
• Net income attributable to The Carlyle Group Inc. decreased to $808.7 million in 2025 from $1,020.4 million in 2024.
• Distributable Earnings (DE) increased to $1,691.2 million in 2025 from $1,525.5 million in 2024.
• Fee Related Earnings (FRE) increased to $1,236.2 million in 2025 from $1,104.6 million in 2024.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive. While net income declined due to specific investment income factors and an NGP restructuring, the underlying operational metrics (DE, FRE) showed growth, and AUM expansion and capital deployment were robust, indicating strong business fundamentals and strategic execution in a challenging market.

Positives

• Total AUM grew by 8% to $477 billion, indicating strong asset gathering capabilities.
• Inflows increased significantly by 32% to $53.7 billion, demonstrating robust investor confidence and successful fundraising.
• Deployment of capital increased by over 25% to $54.5 billion, suggesting active investment opportunities and efficient capital allocation.
• Realized proceeds for carry fund investors increased by 19% to $34.1 billion, reflecting successful exits and value creation.
• Successful initial public offerings (IPOs) of portfolio companies like Medline, Orion Breweries, and Hexaware highlight strong portfolio performance and diverse exit strategies.
• Global Credit segment experienced 10% AUM growth and more than doubled deployment compared to 2023, driven by direct lending and structured credit.
• Carlyle AlpInvest segment's AUM increased by 20%, with strong fundraising in secondaries & portfolio finance and new fund launches.
• Distributable Earnings (DE) and Fee Related Earnings (FRE) both showed positive growth year-over-year, indicating healthy core operational performance.
• The company returned approximately $0.9 billion in capital to shareholders through $505 million in dividends and $400 million in share repurchases.
• The senior revolving credit facility was amended to extend its maturity date to May 29, 2030, enhancing long-term liquidity.

Negatives

• Net income attributable to The Carlyle Group Inc. decreased by 21% from $1,020.4 million in 2024 to $808.7 million in 2025.
• Total investment income decreased by $912.7 million, or 40%, primarily due to a $793.2 million decrease in performance allocations and a $119.5 million decrease in principal investment income.
• Performance allocations decreased by 39% to $1,222.5 million in 2025 from $2,015.7 million in 2024, largely due to a reversal of accruals in CAP V and lower NGP accrued carry.
• Principal investment income decreased by 50%, primarily due to a $92.5 million impairment charge and a $38.0 million reduction in NGP accrued carry related to the NGP restructuring.
• Investment losses from CLOs in 2025 contrasted with gains in 2024, contributing to the decline in principal investment income.
• Global Private Equity's Fund management fees decreased by $35.7 million, or 3%, due to step-downs in management fee basis and net investment realizations.
• The public-private market valuation gap widened in 2025, with buyout purchase multiples falling while public market valuations rose, potentially making exits more challenging.
• Cumulative contributions have exceeded distributions by nearly $550 billion since 2020, restricting investor liquidity and reducing commitments to private capital assets.
• The software sector sold off by 33% year-to-date through February 24, 2026, on AI disruption fears, indicating potential volatility in tech-heavy portfolios.

Risks

• Adverse economic and market conditions, including changes in interest rates, inflation, and geopolitical tensions, could negatively impact investment values, fundraising, revenue, and cash flow.
• Use of leverage in business operations and fund investments exposes the company to substantial risks, including refinancing difficulties and increased borrowing costs.
• Revenue, earnings, net income, and cash flow can vary materially due to reliance on performance revenues and timing of realizations, making steady earnings growth difficult.
• Dependence on senior Carlyle professionals, including the CEO, means the loss of their services or investor confidence in them could materially adversely affect the business.
• Recruiting and retaining talented professionals is increasingly difficult and competitive, potentially leading to higher compensation costs and impacting business results.
• Expansion into new investment strategies, geographic markets, businesses, or investor types (e.g., individual investors) may introduce additional risks, complexities, and compliance burdens.
• Operational risks, system security risks, data protection breaches, and cyberattacks could disrupt businesses, result in losses, or limit growth, with potential for significant financial and reputational damage.
• Use of artificial intelligence (AI) technology by the company and its portfolio companies could lead to data exposure, performance failures, and increased competitive, operational, legal, and regulatory risks.
• Rapidly developing and changing global data security and privacy laws and regulations could increase compliance costs and subject the company to enforcement risks and reputational damage.
• Extensive regulation of the business by governmental agencies and self-regulatory organizations creates potential for significant liabilities, penalties, and additional burdens.
• Financial regulations and changes in the United States, such as the Volcker Rule, Form PF amendments, and clawback policies, could adversely affect the business and increase compliance costs.
• Regulatory initiatives in jurisdictions outside the United States (e.g., EU, UK, China) like AIFMD II, IFR/IFD, and new AML/CTF rules could increase costs, limit operations, and disadvantage investment funds.
• Substantial risk of litigation and regulatory proceedings, including securities class action lawsuits and allegations of improper conduct, could lead to significant liabilities and reputational damage.
• Failure to deal appropriately with conflicts of interest in investment business could damage reputation and adversely affect businesses, especially with expanding business lines and diverse investment strategies.
• The asset management business is intensely competitive, with factors like investment performance, fees, and technological innovation driving competition, potentially leading to lower fees or reduced returns.
• Poor performance of investment funds would cause a decline in revenue, income, and cash flow, and may obligate the company to repay carried interest (giveback obligations).
• Historical returns of funds are not indicative of future results, and future returns may be lower due to increased competition, market conditions, or new investment strategies.
• Risk management activities, including the use of derivative instruments, may not be effective or could adversely affect investment returns due to incorrect market predictions or counterparty defaults.
• Trade negotiations and related government actions (e.g., tariffs, sanctions) may create regulatory uncertainty for portfolio companies and investment strategies, affecting profitability.
• Ability to raise capital from third-party investors depends on economic conditions and investor policies, and a failure to raise capital on attractive terms would reduce revenue and cash flow.
• Investments in relatively illiquid assets mean profits may not be realized for considerable periods, and funds may be forced to dispose of investments at disadvantageous times.
• Investments in companies not controlled by Carlyle, including consortium transactions, may lead to decisions not aligned with Carlyle's interests or shared governance challenges.
• Investments in assets denominated in foreign currencies expose funds to currency exchange rate fluctuations, impacting performance.
• Equity and subordinated debt investments rank junior to other indebtedness, exposing the company to greater risk of loss in insolvency or financial distress.
• Concentration of fund investments in particular asset types or geographic regions could exacerbate negative performance if those concentrated investments perform poorly.
• Investments in companies experiencing significant financial or business difficulties, including bankruptcy, carry a greater risk of poor performance or loss.
• Reliance on third-party service providers (e.g., prime brokers, custodians, cloud services) exposes the company to risks of service disruptions, defaults, and data security breaches.
• Real estate funds are subject to inherent risks in ownership and operation of real estate, including economic conditions, interest rates, environmental liabilities, and regulatory changes (e.g., Residential Ownership Laws).
• Energy business investments in oil and gas entail a high degree of risk due to price volatility, technological change, geopolitical developments, and climate-driven demand shifts.
• Investments in natural resources, infrastructure, energy, power, and renewables involve various operational, construction, and regulatory risks, including climate change impacts and policy shifts.
• Investments in the insurance industry (e.g., Fortitude) are highly regulated and subject to frequent regulatory changes, potentially impacting operations, financial performance, and compliance costs.
• The market price of common stock may decline due to the large number of shares eligible for future sale, including from vesting of restricted stock units.
• Co-founders have rights to designate Board members, giving them significant influence over Board composition.
• Anti-takeover provisions in organizational documents could delay or prevent a change in control that stockholders might consider favorable.
• The company's certificate of incorporation does not limit former general partner, co-founders, directors, officers, or stockholders from competing with Carlyle.
• If The Carlyle Group Inc. were deemed an investment company under the Investment Company Act, applicable restrictions could make it impractical to continue business as contemplated.
• Consolidation of investment funds, holding companies, or operating businesses could make it more difficult to understand operating performance and create operational risks.
• Changes in relevant tax laws, regulations, or treaties, or adverse interpretations by tax authorities, could negatively impact the effective tax rate, tax liability, and/or fund performance.
• U.S. and foreign tax regulations (e.g., FATCA, CRS, BEPS, ATAD rules, Unshell Proposal, BEFIT, FASTER, Pillar Two GloBE) could adversely affect ability to raise funds from certain foreign investors and increase compliance costs.

Future Outlook

Carlyle expects that earning attractive returns on new investments will be more difficult than in the past due to the current market environment. The company anticipates continued increases in compensation levels and general, administrative, and other expenses due to business growth and professional fees. Regulatory changes, particularly AIFMD II and UK AIFMD reforms, are expected to increase compliance costs and potentially impact fundraising and operational models in Europe. The company also continues to monitor the evolving landscape of AI Technologies and their potential impact on competitive, operational, legal, and regulatory risks.

Management Comments

• Our teams invest across a range of strategies that leverage our deep industry expertise, local insights, and global resources to deliver attractive returns throughout an investment cycle.
• We seek to invest with a clarity of purpose, adaptability, and alignment between our interests and the interests of our fund investors, shareholders, and other stakeholders.
• We believe that our global platform helps enhance all stages of the investment process, including by facilitating faster and more effective diligence, a deeper understanding of global industry trends and priority access to the capital markets.
• We believe this robust data gives us an advantage over our peers who do not have as large of a global reach. Additionally, we are leveraging technological innovations and artificial intelligence tools which offer operational efficiency potential across the deal life cycle from sourcing and diligence, all the way through to exits.
• We believe that one of the strengths and principal reasons for our success is the quality and dedication of our people.
• We strive to maintain a work environment that reinforces our culture where employees strive to excel, deliver for the firm, challenge the status quo, and leverage diverse perspectives.
• We believe ESG integration provides an additional lens to help us assess and mitigate risks and identify and capitalize on potential opportunities.
• To our knowledge, cybersecurity threats, including as a result of any previous detected or undetected cybersecurity incidents, have not materially affected us, including our business strategy, results of operations, or financial condition; however, we may learn new facts about these detected or undetected incidents and these facts may lead us to change this materiality assessment.

Industry Context

StockSavvy.ai notes that Carlyle's strong AUM growth and increased deployment in 2025 occurred within a volatile global market, characterized by robust public equity performance (S&P 500 up 16.4%, MSCI ACWI up 20.6%) but also significant interim volatility and a widening public-private market valuation gap. The concentration of public market gains in AI-related stocks and the subsequent sell-off in the software sector highlight the rapid technological shifts impacting the financial industry. Carlyle's focus on direct lending and structured credit, alongside its expansion into evergreen wealth products, aligns with broader industry trends seeking diversified capital sources and catering to individual investors. The firm's emphasis on ESG integration and leveraging AI tools reflects a proactive stance in a competitive and evolving asset management landscape, where competitors are also developing private equity and private wealth platforms.

Comparison to Industry Standards

• The S&P 500 rose by 16.4% over the twelve months ending December 31, 2025, while the MSCI All Country World Index (MSCI ACWI) increased by 20.6%. Carlyle's overall carry fund portfolio appreciated 8% during 2025, which is lower than these public market benchmarks, but private market returns are typically measured over longer horizons and involve different risk profiles.
• The public-private market valuation gap widened to its largest level in at least a decade in 2025, with U.S. buyout purchase multiples falling to 11.2x EBITDA while public market valuations rose to 17.7x EBITDA. This suggests private market assets are valued more conservatively compared to public counterparts, potentially indicating better entry points for new investments or challenges for exits.
• Globally, financial sponsors announced $657 billion in buyout transactions in 2025, a 48% increase over 2024, with U.S.-target deals accounting for nearly 60% of global volume. Carlyle's deployment of $54.5 billion across its platform, a 28% increase over 2024, indicates active participation in this accelerating M&A environment.
• Buyout exits remained slow in the broader market, with aggregate exit volumes of $116 billion in Q4 2025, 18% lower than Q4 2024. Carlyle's realized proceeds of $34.1 billion from carry funds in 2025, an increase of 19% from the prior year, suggests it outperformed the broader exit environment, particularly with successful IPOs like Medline.
• Credit spreads, which currently sit near historic lows, could widen, increasing financing rates. Carlyle's Global Credit business, with its strong direct lending originations and structured credit products, is positioned to potentially benefit from higher risk-adjusted returns in such an environment, contrasting with traditional fixed income.

Management Changes

Corporate Governance

Legal Proceedings

• The Authentix Matter: A lawsuit filed by former minority shareholders alleging breach of fiduciary duties in the sale of Authentix, Inc. The Delaware Court of Chancery ruled in favor of the Company and defendants on January 8, 2025. The Delaware Supreme Court affirmed this decision on November 5, 2025.
• The Tax Receivable Agreement Matter: A lawsuit alleging breach of certificate of incorporation and derivative claims against officers and directors regarding cash payments associated with the elimination of a tax receivable agreement. The Delaware Court allowed most claims to proceed to discovery on April 24, 2024. Plaintiffs filed a consolidated amended complaint on November 17, 2025, and defendants filed a motion to dismiss on January 16, 2026. The Company intends to contest the direct claims vigorously.
• The Company is subject to ongoing examinations, inquiries, and investigations by various U.S. and non-U.S. governmental and regulatory agencies, which may result in fines, suspensions, or other sanctions.

Related Party Transactions

• Aircraft Transactions: The Company incurred fees of $2.3 million in 2025 (vs. $1.3 million in 2024) for the use of aircraft owned by entities controlled by co-founders, based on market rates.
• BDC Preferred Shares: The Company exchanged 2,000,000 preferred shares of Carlyle Secured Lending, Inc. (CGBD) for 3,004,808 newly issued common shares of CGBD on March 27, 2025, as part of a merger. The Company received $0.8 million in dividend income from these preferred shares in 2025 (vs. $3.5 million in 2024).
• Co-investment Entities: Senior Carlyle professionals and employees participate in co-investment entities that invest in or alongside Carlyle funds, generally without management fees or performance allocations, but are responsible for partnership expenses.
• Guaranteed Loans: Certain consolidated subsidiaries guarantee revolving credit facilities for Carlyle AlpInvest funds, with a maximum potential funding of $120 million as of February 25, 2026, for a Global Credit segment fund. The company believes the likelihood of material funding is remote.
• NGP Strategic Investment: The Company has equity interests in NGP Management and general partners of NGP Carry Funds, entitling it to allocations of management fee related revenues (up to 55%) and performance allocations (up to 47.5%). A restructuring in March 2025 resulted in a $92.5 million impairment charge and a $38.0 million reduction in accrued performance allocations related to NGP.
• Fortitude Investment: Carlyle FRL, a Carlyle-affiliated fund, holds a controlling interest in Fortitude, with Carlyle's indirect ownership at 10.5%. Carlyle receives recurring management fees from Fortitude's general account assets under a strategic advisory services agreement. Fortitude and its affiliates have committed approximately $24.6 billion of capital to Carlyle strategies.
• Loans to Employees: Notes receivable include interest-bearing loans of $19.5 million to certain eligible Carlyle employees (excluding Section 16 officers and senior management) to finance their investments in Carlyle-sponsored funds.

Stakeholder Impact

• Shareholders: Impacted by the decrease in net income, but also benefit from increased Distributable Earnings, Fee Related Earnings, AUM growth, and capital returns through dividends ($1.40 per share annually) and share repurchases ($400 million in 2025). The termination of a co-founder's stockholder agreement could alter governance dynamics.
• Employees: Affected by compensation and benefits, including equity-based awards and performance-based bonuses. The company's focus on recruiting and retaining talent, along with leadership development and ESG initiatives, aims to foster a positive work environment. However, increased competition for talent and potential changes in tax treatment of carried interest could impact employee incentives.
• Investors (Fund LPs): Benefit from realized proceeds ($34.1 billion in 2025) and fund appreciation. However, they face risks from poor fund performance, potential giveback obligations, and the impact of regulatory changes (e.g., AIFMD II, Form PF) on fund terms and operations. Liquidity constraints in the broader private markets may also affect their ability to commit to new funds.
• Customers (Portfolio Companies): Benefit from Carlyle's deployment of capital ($54.5 billion in 2025) and value creation strategies, including operational expertise, digital transformation, and procurement programs. They are also exposed to industry-specific risks, macroeconomic conditions, and regulatory changes.
• Creditors: Impacted by the company's debt obligations, including senior notes ($800 million issued in 2025) and CLO borrowings. The company's compliance with financial covenants and its liquidity position are key factors for creditors.
• Regulatory Authorities: The company is subject to extensive scrutiny and compliance requirements from various U.S. and international regulators, leading to increased compliance costs and potential for enforcement actions.

Next Steps

• The board of directors will declare and pay quarterly dividends to common stockholders, with the next payment of $0.35 per share on February 20, 2026.
• The company will continue to monitor and assess the impact of AIFMD II and UK AIFMD reforms on its European fund industry framework, particularly regarding loan origination, delegation, and harmonization.
• The company will continue to monitor and assess the impact of the EU Market Integration Package (MIP) proposals, expected to come into effect in the second half of 2027.
• The company will continue to monitor and assess the impact of the European Commission's proposals for amending the SFDR (SFDR 2.0), with the revised framework likely operational in 2028.
• The company will continue to monitor and assess the impact of the Sustainability Omnibus amendments to the CSRD, with the final text expected in the first half of 2026.
• The company will continue to monitor and assess the impact of the UK FCA's further consultation on expanding the scope of sustainability disclosure requirements (SDR) to potentially cover portfolio managers, overseas products, and pension products.
• The company will continue to monitor and assess the impact of the HM Treasury's policy statement on changes to the UK Appointed Representatives regime, which will require FCA permission for acting as principal.
• The company will continue to monitor and assess the impact of the OECD's Pillar Two GloBE model rules and the announced side-by-side system for U.S.-parented groups.
• The company will continue to monitor and assess the impact of the OBBBA and additional guidance from the U.S. Department of the Treasury and IRS.
• The company will continue to monitor the impact of Netherlands' withholding tax on dividends.
• The company will continue to comply with risk retention rules governing CLOs issued in Europe.
• The company expects its commitments in its funds to continue to increase with the growth of its assets under management and investments in new products.
• The company intends to contest the direct claims vigorously in The Tax Receivable Agreement Matter, and the officer and director defendants intend to continue contesting the derivative claims vigorously.

Key Dates

Recommendation

Carlyle Group demonstrates strong operational performance with growth in AUM, Distributable Earnings, and Fee Related Earnings, indicating a healthy core business. However, the significant decline in net income and performance allocations, coupled with an impairment charge related to NGP, introduces a degree of uncertainty. While the company is actively returning capital to shareholders and expanding strategically, the complex regulatory environment and competitive pressures in the asset management industry, along with the inherent volatility of private market investments, suggest a 'hold' recommendation. Investors should monitor the company's ability to sustain AUM growth, manage performance allocation volatility, and navigate evolving market and regulatory landscapes.

Keywords

Asset Management, Private Equity, Global Credit, Carlyle AlpInvest, AUM, Fee-earning AUM, Distributable Earnings, Fee Related Earnings, SEC Filing, 10-K, Investment Funds, Carried Interest, CLOs, Real Estate, Infrastructure, Natural Resources, Life Sciences, Aviation Finance, Direct Lending, Capital Markets, Corporate Governance, Risk Management, Cybersecurity, Taxation, Share Repurchase, Dividends, Fortitude, NGP Energy, Artificial Intelligence