|Man reading a business newspaper|
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.