Frolic about, holding a pen (5)
I believe the answer is:
kraal
'pen' is the definition.
(kraal is a kind of pen)
'frolic about holding a' is the wordplay.
'frolic' becomes 'lark' ('lark' can be a synonym of 'frolic'**).
'about' says the letters should be written backwards.
'holding' means one lot of letters goes inside another.
'lark' back-to-front is 'kral'.
'kral' going around 'a' is 'KRAAL'.
(Other definitions for kraal that I've seen before include "Traditional African village" , "African village enclosure" , "Corral" , "village in Africa" , "Pen" .)