Glossary · Structures

What is an SPV?

An SPV, or special purpose vehicle, is a separate legal entity set up to hold one investment or deal, keeping its assets and liabilities apart from the sponsor’s.

In practice

SPVs are usually an LLC, limited partnership or similar company, formed in a jurisdiction chosen for tax and legal reasons. They turn up in co-investments, syndicated deals, GP-led secondaries and financing structures. The sponsor typically manages the SPV and may charge reduced or no fees. An SPV is often confused with a feeder fund, which pools investors into another fund rather than a single asset.

An example

Round numbers, not a real fund

Say a manager wants to buy one company with $300 million from several investors. It creates an SPV that owns only that company and takes the investors’ money.

Why it matters

It lets investors back a single deal and limits what a problem in one investment can touch.

A definition, not advice; where usage varies the entry says so. Something wrong? Tell the desk.

Related terms

Co-investmentCo-investment is when investors put money directly into a deal alongside a fund, usually with lower or no fees and no carried interest.
Feeder fundA feeder fund pools investors’ money and invests it all into a larger master fund, often so investors with different tax or legal needs can share one portfolio.
BlockerA blocker is a corporation placed between certain investors and an investment, so those investors, often tax-exempt or foreign, receive dividends instead of pass-through business income.
Continuation vehicleA continuation vehicle is a new fund that buys one or more assets from a manager’s older fund, so existing investors can cash out or roll over.
Parallel fundA parallel fund invests alongside the main fund on the same terms and at the same time, usually for investors with legal or tax needs the main fund cannot meet.

The terms, in the news each morning.

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