Curriculum – NISM-Series-XIX-D: Category I and II Alternative Investment Fund Managers
SECTION A: BASICS OF INVESTMENTS UNIT 1 – INVESTMENTS LANDSCAPE
- Investment
- Investment Versus Speculation
- Investment Objectives
- Estimating The Required Rate of Return
UNIT 2 – TYPES OF INVESTMENTS
- Traditional Investments Vs. Alternative Investments
- Types of Traditional Investments
- Types of Alternative Investments
- Channels for Making Investments
- Role of Alternative Investments in Portfolio Management
- Alternative Investments – Antecedents and Growth
SECTION B: UNDERSTANDING THE AIF ECOSYSTEM UNIT 3 – ALTERNATIVE INVESTMENT FUNDS IN INDIA AND ITS SUITABILITY
- Evolution and Growth of AIFs in India and Factors Enabling Preference for Indian AIF Market
- Types of AIFs
- Comparison of Categories
- Suitability of AIF Products to Investors
- Current AIF Market in India
- Role of AIFs in Portfolio Diversification
- AIF as A Risk Management Tool
UNIT 4 – ALTERNATIVE INVESTMENT FUND ECOSYSTEM
- Concepts Prevalent in The AIF Industry
UNIT 5 – ALTERNATIVE INVESTMENT FUND STRUCTURING
- Principle of ‘Pooling’
- General ‘Pooling’ Considerations
- Anatomy of AIF Constitution
- Common Fund Structures of AIF
- Comparative Analysis
UNIT 6 – FEE STRUCTURE OF ALTERNATIVE INVESTMENT FUNDS
- Management Fees and Other Expenses
- Hurdle Rate
- High-Water Mark
UNIT 7 – FUND PERFORMANCE AND BENCHMARKING
- Risks in AIF
- Types of Risks in AIFs
- Return Measures in Alternative Investments
- Pre and Post Tax Returns
- Benchmarking
- Benchmarking Agencies
- Worked Out Case
UNIT 8 – LEGAL DOCUMENTATION AND NEGOTIATIONS
- Introduction
- The Trust Document / Limited Liability Partnership Deed / Memorandum and Articles of Associations
- The Investment Management Agreement
- The Subscription (Investor Contribution) Agreement
- Private Placement Memorandum
- Wrapper
- Support Services Agreements
SECTION C: MANAGING AIF INVESTMENTS – CATEGORY I AND II AIFs UNIT 9 – INVESTMENT STRATEGIES
- Investment Strategies Used by Category I and II AIFs
UNIT 10 – INVESTMENT PROCESS AND GOVERNANCE OF FUNDS
- Deal Sourcing
- Investor Due Diligence
- Definitive Agreements
- Investor Protection Rights in Category I and II AIFs
- Regulation On Governance Structure in AIFs
- Role of Human Capital in Avoiding Conflict of Interests
- Co-Investments in AIFs
- Code of Conduct of Investment Managers of AIFs and Investment Committee
- Industry Best Practices
UNIT 11 – VALUATION
- Introduction
- Valuation Basics for Fixed Income Instruments
- Approaches to Equity Valuation
- Approaches to Business Valuation
- Asset Based Valuation
- Discounted Cash Flow (DCF) Valuation
- Relative or Multiple Based Valuation
- Valuation of AIF Portfolio Investments (Investee Companies)
- General Approach to Fund Valuation
- Net Asset Value (NAV)
- Valuation Regulations
- Role of Third-Party Registered Valuers
UNIT 12 – FUND MONITORING, REPORTING AND EXIT
- Monitoring Alternative Investment Fund Progress and Performance
- Regulatory Framework for Fund Monitoring and Reporting
- Fund Reporting
- Exit Options
- Secondary Exits (Secondaries)
- Winding Up of an AIF
- Liquidation Scheme
- Dissolution Period
SECTION D: TAXATION AND REGULATORY FRAMEWORK UNIT 13 – TAXATION
- Taxation of Category I and Category II AIFs
- Set Off and Carry Forward of Loss Under the ITA
- GAAR
- MLI
- Other Applicable Taxes
- Examples
UNIT 14 – REGULATORY FRAMEWORK
- SEBI (Alternative Investment Funds) Regulations, 2012
- Registration Process and Eligibility Criteria
- Sponsor / Manager Commitment
- Concept of Open-Ended and Close-Ended Funds
- Accredited Investor Framework
- First Close, Final Close and Tenure of Funds / Schemes
- Investors’ Subscription to The Fund/Scheme
- Dematerialization of AIF Units
- Raising Corpus Capital
- Investment Conditions Applicable to AIFs
- General Obligations and Responsibilities of AIFs
- Inspection
- Code of Conduct for AIFs
- Market Surveillance by AIFs
- Exemption from Enforcement of the Regulations in Special Cases
- Periodic Disclosures and Reporting
- Specific Due Diligence of Investors and Investments of AIFs
- Foreign Exchange Management Act, 1999
- FDO and Its Economic Significance
- Investment Framework Under FEMA
- Inbound Foreign Investment Routes
- Foreign Investments in AIFs
- Overseas Investments by AIFs
- Prevention of Anti-Money Laundering Act, 2002
- Regulatory Oversight
- Other Related SEBI Regulations
- SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018
- Foreign Account Tax Compliance Act and Common Reporting Standard