As the name implies, an SPV is a company incorporated for a specific reason. There is a broad range of reasons to set up a fund SPV, from facilitating co-investment to acting as carry vehicles; from raising and deploying capital to holding assets; from contracting with suppliers to acting as BidCos for transaction work; and everything in between.
SPVs are pivotal tools in the realm of investment management, serving as essential components for managing risk, optimising tax strategies, and segregating liabilities. Their role, often misunderstood, is not just about administrative convenience but about enhancing the strategic and operational efficiency of investment funds.
In 2024, SPVs are part and parcel of doing business internationally. But it’s essential to remember that each jurisdiction will have different rules governing the structures, including varied regulatory requirements around how they operate.