Friday, July 19, 2019

What Are Special Purpose Vehicles?

Man reading a business newspaper  Image:
Man reading a business newspaper
The CEO of Laidlaw & Company (UK), Ltd., Matt Eitner has been leading the boutique investment bank since 2011. Working in the finance sector for more than 10 years, Matt Eitner has developed a professional interest in such things as special purpose vehicles (SPVs).

A legal entity, an SPV is a company subsidiary created with the purpose of completing a business activity while protecting the parent company from risk. Since SPVs are created with certain purposes in mind, their operations are often limited to financing or buying specific assets. 

However, SPVs are wholly separate from their parent company and continue operating even if the parent company goes bankrupt. Further, assets held by SPVs are not viewed as assets of the parent company, which protects them from financial issues. SPVs may also gather their own investors since they are their own legal entity.