2010 Annual Report - The Carlyle Group

Fund of Funds. We expect to add Fund-of-Funds Solutions to our platform of productswith the anticipated acquisition of AlpInvest Partners, a private equity asset managerwith more than $43 billion of assets under management. The addition of the fund-offundsplatform will provide our investors with a wider range of investment choices andwill significantly expand the scope of Carlyle’s global asset management operations.RMB Beijing Fund. To further strengthen our position in China and expand our investmentcapabilities in this high-growth country, we established a renminbi (RMB)-denominated fund to invest in larger growth companies in Beijing and across China.The fund was established through a partnership between Carlyle Asia Partners andBeijing Municipal Bureau of Financial Work.Structured Credit. We significantly expanded our structured credit operation with theacquisition of two CLO portfolios in 2010. The acquisitions include more than $4 billionof CLO and other credit assets from Stanfield Capital Partners and more than $1 billionof CLOs from Mizuho Alternative Investments. The acquisitions establish Carlyle as oneof the world’s largest structured credit managers.U.S. Equity Opportunities. We formed a new team to focus on smaller, middle-marketbuyout investments in North America. The U.S. Equity Opportunities team will targettransactions ranging in size from $20 million to $150 million of equity across Carlyle’snine core Corporate Private Equity industries.Carlyle Energy Mezzanine:Tapping into growing demand for new energy$1 trillionProjected energy capital needseach year in the United StatesIn 2010, we formed a new team to invest in mezzanine debt in energy and power projects,primarily in the United States and Canada. We believe increasing global demand forenergy and power is creating attractive dynamics for mezzanine investing. Many companiesare under pressure to expand and upgrade their aging energy-generation fleet anddevelop new forms of renewable and unconventional energy generation. At the sametime, traditional banks have cut back on lending, hindering access to capital. As a result,mezzanine debt is becoming a significant source of capital to finance many energy andpower projects.The Carlyle Energy Mezzanine Opportunities team includes former Morgan Stanley projectand structured finance professionals who have a long history working together andwho have spent their careers focused on investing in and financing energy projects. Webelieve this new team’s combination of industry, asset and related structuring expertiseand broad, non-traditional deal-sourcing network provides Carlyle with a significantcompetitive advantage in the multibillion-dollar energy market.26 The Carlyle group