- SPVs allow legal and financial separation of a project from the parent companyâs balance sheet. They facilitate investment in non-traditional assets such as infrastructure or private equity.
- Their adoption is increasing, especially among family offices and funds seeking agility and control.
- FlexFunds offers comprehensive solutions through SPVs to issue listed products (ETPs) tailored to each clientâs needs. If you would like to explore our ETP solutions, you can schedule a meeting with our experts.
Special purpose vehicles (SPVs) are key structures in financial operations, as they contribute to diversifying and isolating risks.
These independent legal entities, created to manage investment in a specific project, have gained traction thanks to their legal flexibility and operational efficiency.
SPVs can be used for asset securitization, debt issuance, or channeling various types of investments.
Simply put, special purpose vehicles are set up as completely autonomous entities in terms of ownership, with a specific economic activity.
In securitization, these entities make it possible to isolate a pool of assets (such as real estate, infrastructure) and convert them into tradable securities.
For structured debt issuance, they are essential when launching bonds or other instruments backed by specific assets.
And in terms of channeling investments, they are useful for repackaging investments in alternative assets (such as private equity, real estate, or infrastructure), making them more accessible and manageable.
SPVs allow legal and accounting separation of a companyâs assets, reducing its exposure to risks.
In addition to isolating financial risks and facilitating direct ownership of an asset, SPVs can optimize tax burdens if structured in favorable jurisdictions.
The creation and setup of an SPV are usually quick and straightforward, according to the Corporate Finance Institute1, an online education and training platform.
However, it warns that limitations may arise, such as reduced access to capital due to lower creditworthiness, accounting risks if assets are sold, and possible complications from regulatory changes.
At FlexFunds, we have designed an asset securitization program through Irish special purpose vehicles (SPVs), enabling the efficient distribution of investment strategies across multiple international private banking platforms.
As a firm specialized in the creation of financial vehicles, we collaborate with renowned international partners to deliver solutions tailored to every need, including Bank of New York, Interactive Brokers, Morningstar, Bloomberg, among others.
The role of SPVs
Their main function is to separate assets legally and in accounting terms from the parent companyâs balance sheet. In practice, this helps protect the overall portfolio against losses or legal contingencies.
âAs it is a separate legal entity, if the parent company goes bankrupt, the special purpose vehicle can carry on,â says the Corporate Finance Institute1.
According to information from the European Commission2, special purpose entities are also useful for efficiently structuring different sources of capital in complex financings.
They also allow participation in public-private partnerships based on a project finance structure, according to the same source.
At the same time, these entities are used to more easily own and manage assets, as well as the permits and rights associated with them.
In private markets, SPVs have become key tools for channeling capital into unlisted companies.
SPVs have become a key tool in Silicon Valley for investing in private tech startups, especially in booming market contexts, according to a recent CNBC3 report.
It explains that six years ago, only 7% of private shares on Forge Global (a marketplace for private company shares) were traded via SPVs.
Today, that figure has risen to 64%, reflecting their growing use in investing in unlisted companies.
Although CNBC notes that in some cases their use may entail risks of transparency, hidden fees, and complexity, they remain popular.
This is largely due to their ability to rapidly mobilize large amounts of capital toward high-profile companies, such as OpenAI, Anthropic, or CoreWeave, according to CNBC.
Diversification without compromising risk
Through these structures, it is possible to diversify not only risk but also geographical exposure.
According to the European Commission, a multinational typically distributes its investments across different countries through a special purpose entity.
To achieve this, it uses structures such as SPVs, but also financial subsidiaries, holdings, among others.
From a diversification perspective, SPVs allow the inclusion of non-traditional assets such as real estate projects, infrastructure, private debt, or venture capital.
Diversification is key in times of high uncertainty and external macroeconomic shocks that threaten business performance.
Principles of a diversified portfolio
Distributing capital across different assets reduces specific risk, integrating into the portfolio options such as stocks, bonds, real estate, private equity, and commodities.
But illiquid assets require special structures for integration, making SPVs a key technical and legal advantage.
For example, if a company wants to build a solar park but does not want to assume all the risks on its general balance sheet, it can choose to create a special purpose vehicle (SPV).
This structure allows the project to be isolated, facilitates access to financing, and enables the issuance of debt backed by the revenues generated by the park itself.
In this way, the company attracts investors and transforms a specific asset into an investment opportunity.
The use of SPVs can be key to mobilizing private capital in strategic sectors.
Latin America, due to its potential and growing business activity, is considered an ideal ground for their deployment.
Growing use among family offices and funds
Family offices use SPVs to invest in early-stage opportunities without having to commit large sums of money from the start.
Meanwhile, banks and fund managers create financial products packaged within SPVs, with defined rules on when and how the investment can be exited.
This enables access to assets that are not listed on exchanges, but with clearer expectations about possible returns and risks.
In the coming years, SPVs are expected to channel capital toward sustainable assets.
Industries such as clean energy, sustainable agriculture, and fintech focused on financial inclusion use SPVs to attract international investment.
This requires clear impact metrics and fiduciary responsibility.
Their use has expanded into strategic sectors such as infrastructure, clean energy, and technology.
FlexFunds offers a five-stage structured solution so that asset managers can efficiently launch tailor-made listed products (ETPs).
It all begins with the design of the ETP, based on a case-by-case analysis and in collaboration with international providers to match the clientâs objectives.
Next, the risk committee reviews the proposal and, upon approval, a commitment letter is signed defining the scope of the service.
Then, the essential legal documents are drafted, such as the Series Memorandum, Constituting Instrument, and Portfolio Management Agreement.
The fourth stage is the issuance of the ETP through an SPV, with an ISIN/CUSIP code that facilitates its distribution.
Finally, the ETP becomes available for trading on Euroclear, accessible from multiple custodians and private banking platforms.
In conclusion, SPVs are an essential tool to structure efficient investments, mitigate risks, and facilitate access to alternative assets.
At FlexFunds, we help you unlock their full potential through tailored solutions and agile processes. Contact us to structure your next investment vehicle.
Sources:
- 1https://corporatefinanceinstitute.com/resources/management/special-purpose-vehicle-spv/
- 2https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Special-purpose_entity_(SPE)
- 3https://www.cnbc.com/2025/03/27/silicon-valley-bubble-risks-heighten-as-investors-pile-into-spvs.html#:~:text=It%20stands%20for%20special%20purpose,tens%20of%20billions%20of%20dollars.
