SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 [Letterhead of Simpson Thacher & Bartlett LLP]

VIA EDGAR

 January 7, 2014

Re:
The Carlyle Group L.P.

Form 10-K for the Fiscal Year Ended December 31, 2012

Filed March 14, 2013

Form 10-Q for the Quarterly Period Ended September 30, 2013

Filed November 12, 2013

File No. 001-35538

 Michael Seaman, Esq.

Division of Corporation Finance

 Securities and Exchange
Commission

 100 F Street, N.E.

 Washington, D.C. 20549

Dear Mr. Seaman:

 On behalf of The Carlyle
Group L.P. (“Carlyle”), we hereby submit the following responses to the comment letter issued by the Securities and Exchange Commission Staff dated December 27, 2013 regarding the Staff’s review of Carlyle’s Form 10-K for
the Fiscal Year Ended December 31, 2012 filed on March 14, 2013 and Form 10-Q for the Quarterly Period Ended September 30, 2013 filed on November 12, 2013.

To assist your review, we have retyped the text of the Staff’s comments in italics below. The responses and information described below
are based upon information provided to us by Carlyle.

 Form 10-K for the Fiscal Year Ended December 31, 2012

Item 1. Business

1.
In future filings, please provide a description of your organizational and ownership structure in this section, including a diagram. Discuss the Carlyle Holdings partnership units your founders and other key business
personnel received that you reference in the risk factor on page 27.

 Carlyle has attached as Annex A to this letter a description of
its organizational and ownership structure, including a discussion of the Carlyle Holdings partnership units received by its founders and other personnel referenced in the risk factor identified by the Staff in its comment. Carlyle advises the Staff
that it will include this description in the “Business” section of its future Annual Reports on Form 10-K.

Securities and Exchange Commission

2

 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 Year Ended December 31, 2012 Compared to the Year Ended December 31, 2011

Performance Fees, page 114

2.
We note your disclosure that the performance fees recorded in 2012 and 2011 were due principally to increases in the fair value of the underlying funds, which increased approximately 14% and 16% in total remaining
value during 2012 and 2011, respectively. We also note that the increase in the fair value of the investments was driven by asset performance and operating projections as well as increases in market comparables. In future filings, when significant
changes in the fair values of your investments occur and have a material impact on your performance fees, please revise your disclosure to discuss the key market factors that positively or negatively impacted the fair values of your investments and
explain whether fair values generally increased (decreased) across your portfolio or whether it varied by fund and/or industry and if so, why.

Carlyle advises the Staff that it has a diversified, multi-product global platform with 122 funds and 81 fund of funds investing across numerous industries,
asset classes and geographies as of December 31, 2013. Carlyle believes that an understanding of its performance fee revenues is primarily attained by understanding the performance of the funds contributing to its performance fees. Carlyle
presently discloses the funds contributing significantly to its performance fees and the contribution to performance fees by segment and fund type (both positive and negative). This disclosure is made and is provided in further detail in the
underlying segment discussions and fund performance tables.

 Carlyle has found that performance of individual funds is primarily driven by individual
company operating performance and less so by changes in market multiples. In addition, Carlyle’s funds are generally targeted to specific geographies, industries and investment classes. The diversification across Carlyle’s portfolio can
make aggregate conclusions difficult to render and its portfolio may or may not move in tandem with broader public markets. However, in light of the Staff’s comment, Carlyle will in future filings include within the discussion of its
consolidated results a summarization of the segment drivers of its performance fees and also further discuss how the factors covered in “Trends Affecting our Business” impact its portfolio valuations where applicable and highlight
differences in segments and/or industries.

 Item 8. Financial Statements and Supplementary Data

Note 3 - Acquisitions, Strategic Investments, and Acquired Intangible Assets

Investment in NGP, page 200

3.
We note your disclosure on page 201 that the difference between the cost of your initial investment in NGP Management and the underlying net assets of the entity was $259.8 million and will be amortized over a period
of ten years as a reduction of realized investment income. We also note that this difference, in part, relates to the options granted to you by the sellers to purchase additional interests in NGP in the future for a predetermined purchase price.
Please tell us how you considered the value of these purchase options and whether they need to be accounted for in accordance with ASC 815.

Securities and Exchange Commission

3

 In December 2012, Carlyle entered into separate purchase agreements with ECM Capital, L.P. (“ECM
Capital”) and Barclays Natural Resource Investments, a division of Barclays Bank PLC (“BNRI”) pursuant to which Carlyle agreed to invest in NGP Management Company, L.L.C. (“NGP Management” and, together with its affiliates,
“NGP”). Under the terms of the transaction agreements, the sellers also granted Carlyle options to purchase additional interests in NGP. Specifically, Carlyle and the sellers agreed:

(1) For $6.0 million cash paid, BNRI granted Carlyle an option to acquire equity interests in the general partner of the NGP Natural Resources
X, L.P. fund (“NGP X”). The option is exercisable by Carlyle between July 1, 2014 and July 1, 2015 to purchase for a price in cash that is estimated to be between $65.0 million to $74.0 million plus the net capital amount that
has been contributed by BNRI, interests in the general partner of NGP X entitling Carlyle to an allocation of income equal to 40% of the carried interest received by such fund general partner.

(2) For $4.0 million cash paid, BNRI granted Carlyle an option to acquire additional equity interests in the general partners of all future NGP
funds. The option is exercisable by Carlyle from December 20, 2012 until January 1, 2015 to purchase for a price in cash that is estimated to be between $34.0 million to $38.0 million, additional interests in the general partners of all
future carry funds advised by NGP entitling Carlyle to an additional allocation of income equal to 40% of the carried interest received by such fund general partners.

(3) For $10 million cash paid to ECM Capital, ECM Capital granted Carlyle an option to acquire the remaining equity interests in NGP Management
in 13 years from the contract date. The option is exercisable by Carlyle for a formulaic purchase price in cash based upon a measure of the earnings of NGP.

Accounting for BNRI Options ((1) and (2) above)

Carlyle considered whether the options that it acquired from BNRI were derivatives under ASC 815. Carlyle noted the following guidance under ASC 815-10-15-83:

 A derivative instrument is a financial instrument or other contract with all of the following characteristics:

a. Underlying, notional amount, payment provision. The contract has both of the following terms, which determine the amount of the settlement
or settlements, and, in some cases, whether or not a settlement is required:

 1. One or more underlyings

2. One or more notional amounts or payment provisions or both.

b. Initial net investment. The contract requires no initial net investment or an initial net investment that is smaller than would be required
for other types of contracts that would be expected to have a similar response to changes in market factors.

 c. Net settlement. The
contract can be settled net by any of the following means:

 1. Its terms implicitly or explicitly require or permit net settlement.

2. It can readily be settled net by a means outside the contract.

3. It provides for delivery of an asset that puts the recipient in a position not substantially different from net settlement.

Securities and Exchange Commission

4

 These options do not permit net settlement (either explicitly or indirectly outside the contract). The underlying
of the options relate to equity interests in a general partner that is a privately held partnership that is not readily convertible into cash and there is no means to net settle outside the contract. Thus, Carlyle concluded that the options are not
derivatives under ASC 815.

 As the options are not derivatives under ASC 815, the options are being carried at cost until the options are exercised or
expire. The options are reviewed on an ongoing basis for possible impairment.

 Accounting for ECM Capital Option ((3) above)

Carlyle performed a similar accounting analysis as to whether the option to acquire the remaining interest in NGP Management from ECM Capital (exercisable by
Carlyle in approximately 13 years from the transaction date) was a derivative under ASC 815. Similar to the BNRI options analysis discussed above, the option agreement between Carlyle and ECM Capital does not permit net settlement and, as ECM
Capital is a privately held company, the interest is not readily convertible to cash.

 Carlyle also noted ASC 815-10-15-74 provides a scope exception for
“a contract between an acquirer and a seller to enter into a business combination” from the definition of a derivative instrument. As the exercise of the option granted to Carlyle by ECM Capital would result in a business combination, this
option is not considered a derivative under ASC 815.

 As the option is not derivative under ASC 815, it is being carried at cost until it is exercised or
expires. The option is reviewed on an ongoing basis for possible impairment.

 Note 4 - Fair Value Measurement, page 206

4.
We note your disclosure that the valuations for corporate private equity and real estate investments may be derived by reference to observable valuation measures adjusted by management for differences between the
investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Please revise your disclosure to discuss the type of adjustments and the factors and information you consider when
determining the appropriate adjustment to make to the observable valuation measures of your corporate private equity and real estate investments. Also explain the situations when the fair value determination would be made by reference to option
pricing models or other similar methods.

 Carlyle advises the Staff that it will include the following disclosures in its future
filings:

 Adjustments to observable valuation measures are frequently made upon the initial investment to calibrate the initial investment
valuation to industry observable inputs. Such adjustments are made to align the investment to observable industry changes for differences in size, profitability, projected growth rates, geography and capital structure if applicable. The adjustments
are reviewed with each subsequent valuation to assess how the investment has evolved relative to the observable inputs. Additionally, the investment may be subject to certain specific risks and/or development milestones which are also taken into
account in the valuation assessment.

Securities and Exchange Commission

5

 Option pricing models and similar tools do not currently drive a significant portion of the
Corporate Private Equity or Real Assets valuation portfolio and are used primarily to value warrants, derivatives, certain restrictions and other atypical investment instruments.

5.
We note that in your tabular disclosure of significant Level III inputs on page 212 you disclosed the weighted average input for each of the unobservable inputs, but in certain circumstances, you did not disclose the
related range for the unobservable inputs used. Please revise your disclosure in future filings to disclose the range of inputs used in all situations where more than one unobservable input is utilized in the determination of fair value.

 Carlyle advises the Staff that it had omitted the related range for many of the unobservable inputs where it initially believed that
the range was either so wide as to not be meaningful or that the items deviating from the weighted average were not significant. However, Carlyle acknowledges the Staff’s comment and advises the Staff that it will disclose the related ranges in
future filings.

6.
Please revise future filings to provide further discussion of the valuation processes utilized by management in valuing your Level III measurements in accordance with ASC 820-10-50-2(f) and 820-10-55-105.

 To enhance its disclosure of valuation processes, Carlyle will include the following disclosure in its future filings:

Investment professionals with responsibility for the underlying investments are responsible for preparing the investment valuations pursuant to
the policies, methodologies and templates prepared by the Partnership’s valuation group, which is a team made up of individuals with previous valuation experience reporting to the Partnership’s Chief Accounting Officer. The valuation group
is responsible for maintaining the Partnership’s valuation policy and related guidance, templates and systems that are designed to be consistent with the guidance found in Accounting Standards Codification Topic 820. These valuations, inputs
and preliminary conclusions are reviewed by the fund accounting teams. The valuations are then reviewed and approved by the respective fund valuation sub-committees which are comprised of the respective fund head, segment head, chief financial and
chief accounting officers as well as members from the valuation group. The valuation group compiles the aggregate results and significant matters and presents them for review and approval by the global valuation committee, which is comprised of the
Partnership’s co-chief executive officers, chief operating officer, chief risk officer, chief financial officer, chief accounting officer, the business segment heads, and observed by the chief compliance officer and director of internal audit.
Additionally, each quarter a sample of valuations are reviewed by external valuation firms.

7.
We note your disclosure that investments in partnership and LLC interests are valued using the NAV of the underlying fund. However, it is not clear to us where you have provided all the required disclosures of ASC
820-10-50-6A. Please advise, or revise your disclosure in future filings as necessary.

 Carlyle consolidates certain fund of funds
investment vehicles, primarily those managed by Carlyle’s AlpInvest subsidiary. The underlying investments in these vehicles are valued using the NAV of the underlying fund and are considered a single class of investments for purposes of the
referenced disclosure requirements.

Securities and Exchange Commission

6

 On page 209 in footnote 4 to the financial statements in the Form 10-K, the following disclosure is provided:

 Fund Investments—The Partnership’s investments in funds are valued based on its proportionate share of the net assets provided
by the third party general partners of the underlying fund partnerships based on the most recent available information which is typically a lag of up to 90 days. The terms of the investments generally preclude the ability to redeem the investment.
Distributions from these investments will be received as the underlying assets in the funds are liquidated, the timing of which cannot be readily determined.

C