SVKM’s Narsee Monjee Institute of Management Studies

Name of School - School of Business Management

Common for Bangalore, Hyderabad, Navi Mumbai & Indore Campus
Master of Business Administration – MBA

Program: MBA Trimester /Semester: VI

Course/Module : Alternative Investment Markets Module Code:
Teaching Scheme Evaluation Scheme
Lecture Practical
Tutorial Internal Continuous Term End
(Hours (Hours
(Hours per Credit Assessment (ICA) Examinations (TEE)
per per
week) (Marks - 60) (Marks- _40)
week) week)
3 0 0 3 Marks Scaled to 60 Marks Scaled to 40
Pre-requisite:
• Corporate Finance
• Investment Analysis & Portfolio Management, Derivatives.
• A thorough understanding of Spreadsheet applications in Finance,
• Portfolio Modeling, Hedging strategies with Derivatives,
Course Objective:
• CLO 1) To distinguish and understand various characteristics of various alternative investment asset
classes and incorporate them in investment portfolios.
• CLO 2) To understand various hedge fund strategies and assess their performance.
• CLO 3) To Understand and evaluate investment techniques and valuation in Private equity, Venture
Capital and LBO deals
Outcomes:
• Characterize the common features of alternative investments and the structure of their markets
and evaluate the risk and returns of the same.
• Evaluate the investment techniques and strategies of hedge funds and performance of the hedge
funds.
• Analyze risk, returns characteristics in Private Equity, Venture Capital industry and valuation of
various PE transactions including LBO deals.
• Analyze Real Estate investments, including REIT and Commodity futures, Cryptos.
Detailed Syllabus: (per session plan)

Unit Description Duration

1 Introduction to Alternative Investment 1.5 Hrs

• Categories of Alternative Investments
• Traditional Investments vs Alternative investments
• History of Alternative Investments
• Methods of investing in Alternative Investments
2 • Due diligence for Fund Investing 1.5 Hrs.
• Partnership Structures
• Investment compensation structures (Management Fees, Performance fees)
• Investment Clauses, Provisions
3 Hedge Funds & Hedge Fund Strategies 1.5 Hrs
• Unique characteristics of Hedge funds
• Hedge Fund Structure & Stakeholders
• Hedge Funds vs Mutual Funds
4 Hedge Fund Fees, Incentives and Performance Evaluation 1.5 Hrs
• Management fees – Performance fees calculation, Soft hurdle vs Hard Hurdle,
High water mark, NAV and Fund return
 SVKM’s Narsee Monjee Institute of Management Studies
Name of School - School of Business Management
Common for Bangalore, Hyderabad, Navi Mumbai & Indore Campus
Master of Business Administration – MBA

5 Hedge Fund Strategies 1.5 Hrs

• Equity Fund Strategies Long/Short, Dedicated Short Selling, Market Neutral
• Event drive Strategies: Merger Arbitrage, Distressed Securities
6 Hedge Fund Strategies 1.5 Hrs
• Relative Value Strategies: Fixed Income Arbitrage, Convertible bond
• Opportunity Strategies: Global Macro, Managed Futures
7 Private Capital – Private Equity, Venture Capital, LBO: 1.5 Hrs
• Introduction to PE, VC, LBO
• Classification of PE
• Structure of Private Equity, Venture Capital Fund (LP – GP Set up)
• Economic Terms of PE
• Exit Strategies
8 • Private Equity (Venture Capital) Compensation Structure 1.5 Hrs
• Management fees, Carried Interest, Catchup clause provision, Hurdle rate
• Profit sharing between LPs and GPs, Committed Capital, paid in or Invested
capital,
• Profit distribution Waterfall types – American vs European.
• Claw back clause.
9 VC Method for Valuation of Venture Capital Transactions: 1.5 Hrs
• Post Money, Pre-Money Valuation, VC fractional ownership – Single, 2 rounds
of Funding in VC – Expected Exit Valuation –Stage Financing
• Private Equity –Quantitative measures of returns
• Analysis of Return Multiples –MOIC, IRR
10 Understanding & Evaluation of performance LBO deals in Private Equity 1.5 Hrs
Market
• LBO structure, LBO History
• LBO Deal Purchase Price – Entry and Exit
• EBITA Multiple (LTM, FTM)
• Basic LBO Model
• Valuation of LBO – IRR, MOIC
11 Real Estate and REIT 1.5 Hrs
• Characteristics of different forms of Real Estate –
• Overview of Real estate Investment – Characteristics
• The Sources of Return, Risks, and Diversification
12 • Benefits of Real Estate Investment 1.5 Hrs
• Direct Real Estate Investment and Indirect Real Estate Investment
13 Valuation of Real Estate & REITs 1.5 Hrs
• Income Approach – Net Operating Income, Capitalization
• Replacement cost Approach – Using curable, incurable depreciation,
Functional, Economical and Locational obsolescence(s)
• Market Abstraction Method, Sales Comparison Method, Residual
Techniques
14 • Discounted Cash Flow Analysis 1.5 Hrs
• Valuation of REITs
• Net Operating Income, FFO, AFFO, DCF approach in valuation
 SVKM’s Narsee Monjee Institute of Management Studies
Name of School - School of Business Management
Common for Bangalore, Hyderabad, Navi Mumbai & Indore Campus
Master of Business Administration – MBA

15 Commodities and Natural Resources 1.5 Hrs

• Types of Natural Resource Investments
• Commodity Sectors and Factors
• Life Cycle of Commodities
16 • Commodity Futures Markets, Pricing, Basis, Contango, Backwardation, Storage, 1.5 Hrs
Convenience Yield
17 Crypto Currencies and Digital Assets 1.5 Hrs
• Introduction to Cryptocurrencies
• Blockchain Technology,
• Popular Crypto currencies,
• Cryptocurrency Market and Trading
• Cryptocurrency Economics
18 Asset Allocation, Portfolio Optimization of Alternative Assets – Demo of Alt Inv 1.5 Hrs
multi asset Portfolio – Excel exercise in class
19-20 Group Presentations 3 Hrs
Total 30 Hrs.

Textbooks:
• Alternative Investments –CFA Institute Investment Series – WILEY – (2021) (T1)
Reference Books:
• Alternative Investments CAIA Level 1 - Fourteenth Edition – WILEY (2020)– Donald R
Chambers, Mark J.P. Anson, Keith H Block Hossien B Kazemi (R1)
• Alternative Investments: A primer for investment professionals CFA/ CAIA- Donald Chambers,
Keith H. Block, Nelson J. Lacey (2018) (R2)
Evaluation Pattern
Description of ICA Marks
Quiz I 15
Quiz II 15
Project / Assignment 15
Group Presentation 15
Term End Exam (Comp Based) 40

Area Leads:

Dr. Suman Chakraborty

Dr. Niranjan Shastri