Curriculum-NISM-Series-XIX-D: Category I and II Alternative Investment Fund Managers

Curriculum – NISM-Series-XIX-D: Category I and II Alternative Investment Fund Managers

SECTION A: BASICS OF INVESTMENTS
UNIT 1 – INVESTMENTS LANDSCAPE

1. Investment

2. Investment Versus Speculation

3. Investment Objectives

4. Estimating The Required Rate of Return

UNIT 2 – TYPES OF INVESTMENTS

1. Traditional Investments Vs. Alternative Investments

2. Types of Traditional Investments

3. Types of Alternative Investments

4. Channels for Making Investments

5. Role of Alternative Investments in Portfolio Management

6. Alternative Investments – Antecedents and Growth

SECTION B: UNDERSTANDING THE AIF ECOSYSTEM
UNIT 3 – ALTERNATIVE INVESTMENT FUNDS IN INDIA AND ITS SUITABILITY

1. Evolution and Growth of AIFs in India and Factors Enabling Preference for Indian AIF Market

2. Types of AIFs

3. Comparison of Categories

4. Suitability of AIF Products to Investors

5. Current AIF Market in India

6. Role of AIFs in Portfolio Diversification

7. AIF as A Risk Management Tool

UNIT 4 – ALTERNATIVE INVESTMENT FUND ECOSYSTEM

1. Concepts Prevalent in The AIF Industry

UNIT 5 – ALTERNATIVE INVESTMENT FUND STRUCTURING

1. Principle of ‘Pooling’

2. General ‘Pooling’ Considerations

3. Anatomy of AIF Constitution

4. Common Fund Structures of AIF

5. Comparative Analysis

UNIT 6 – FEE STRUCTURE OF ALTERNATIVE INVESTMENT FUNDS

1. Management Fees and Other Expenses

2. Hurdle Rate

3. High-Water Mark

UNIT 7 – FUND PERFORMANCE AND BENCHMARKING

1. Risks in AIF

2. Types of Risks in AIFs

3. Return Measures in Alternative Investments

4. Pre and Post Tax Returns

5. Benchmarking

6. Benchmarking Agencies

7. Worked Out Case

UNIT 8 – LEGAL DOCUMENTATION AND NEGOTIATIONS

1. Introduction

2. The Trust Document / Limited Liability Partnership Deed / Memorandum and Articles of Associations

3. The Investment Management Agreement

4. The Subscription (Investor Contribution) Agreement

5. Private Placement Memorandum

6. Wrapper

7. Support Services Agreements

SECTION C: MANAGING AIF INVESTMENTS – CATEGORY I AND II AIFs
UNIT 9 – INVESTMENT STRATEGIES

1. Investment Strategies Used by Category I and II AIFs

UNIT 10 – INVESTMENT PROCESS AND GOVERNANCE OF FUNDS

1. Deal Sourcing

2. Investor Due Diligence

3. Definitive Agreements

4. Investor Protection Rights in Category I and II AIFs

5. Regulation On Governance Structure in AIFs

6. Role of Human Capital in Avoiding Conflict of Interests

7. Co-Investments in AIFs

8. Code of Conduct of Investment Managers of AIFs and Investment Committee

9. Industry Best Practices

UNIT 11 – VALUATION

1. Introduction

2. Valuation Basics for Fixed Income Instruments

3. Approaches to Equity Valuation

4. Approaches to Business Valuation

5. Asset Based Valuation

6. Discounted Cash Flow (DCF) Valuation

7. Relative or Multiple Based Valuation

8. Valuation of AIF Portfolio Investments (Investee Companies)

9. General Approach to Fund Valuation

10. Net Asset Value (NAV)

11. Valuation Regulations

12. Role of Third-Party Registered Valuers

UNIT 12 – FUND MONITORING, REPORTING AND EXIT

1. Monitoring Alternative Investment Fund Progress and Performance

2. Regulatory Framework for Fund Monitoring and Reporting

3. Fund Reporting

4. Exit Options

5. Secondary Exits (Secondaries)

6. Winding Up of an AIF

7. Liquidation Scheme

8. Dissolution Period

SECTION D: TAXATION AND REGULATORY FRAMEWORK
UNIT 13 – TAXATION

1. Taxation of Category I and Category II AIFs

2. Set Off and Carry Forward of Loss Under the ITA

3. GAAR

4. MLI

5. Other Applicable Taxes

6. Examples

UNIT 14 – REGULATORY FRAMEWORK

1. SEBI (Alternative Investment Funds) Regulations, 2012

2. Registration Process and Eligibility Criteria

3. Sponsor / Manager Commitment

4. Concept of Open-Ended and Close-Ended Funds

5. Accredited Investor Framework

6. First Close, Final Close and Tenure of Funds / Schemes

7. Investors’ Subscription to The Fund/Scheme

8. Dematerialization of AIF Units

9. Raising Corpus Capital

10. Investment Conditions Applicable to AIFs

11. General Obligations and Responsibilities of AIFs

12. Inspection

13. Code of Conduct for AIFs

14. Market Surveillance by AIFs

15. Exemption from Enforcement of the Regulations in Special Cases

16. Periodic Disclosures and Reporting

17. Specific Due Diligence of Investors and Investments of AIFs

18. Foreign Exchange Management Act, 1999

19. FDO and Its Economic Significance

20. Investment Framework Under FEMA

21. Inbound Foreign Investment Routes

22. Foreign Investments in AIFs

23. Overseas Investments by AIFs

24. Prevention of Anti-Money Laundering Act, 2002

25. Regulatory Oversight

26. Other Related SEBI Regulations

27. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018

28. Foreign Account Tax Compliance Act and Common Reporting Standard