Special Purpose Vehicles (SPVs)

What is an SPV

An SPV is a legally separate entity created for a specific, limited, and predefined purpose. SPVs are commonly used in cross border investments and structured finance transactions to isolate financial risk, hold assets, raise capital, or facilitate a particular project or investment.

What are SPVs Used For

SPVs can serve a wide range of functions depending on the industry and transaction structure, including:

• Asset holding

• Acquisitions 

• Risk isolation

• Financing and capital raising

• Securitisation

• Regulatory or tax structuring

Benefits of SPVs

SPVs offer several strategic advantages, including:

• Risk ring-fencing

• Bankruptcy remoteness

• Financing flexibility

• Operational separation

• Regulatory efficiency

• Investor clarity

On-Balance Sheet vs. Off-Balance Sheet (Orphan) SPVs

On-Balance Sheet

• The SPV is consolidated into the parent company's financial statements

• Assets, liabilities, revenues, and expenses of the SPV appear on the parent’s balance sheet

• Typically used when the parent maintains control, bears the majority of risks and rewards, or provides support

• Common in corporate subsidiaries, project finance entities, private equity, holding company's and wholly owned investment vehicles

Off-Balance Sheet

• The SPV is not consolidated into the parent company's financial statements

• Used primarily to isolate financial risk and achieve bankruptcy remoteness

• Requires strict independence: independent directors, no parental guarantees, and arm’s-length transactions

• Common in securitisation transactions, note issuing vehicles, asset-backed financing, and risk transfer structures

Common SPV Jurisdictions

SPVs are frequently established in offshore and international finance hubs, such as:

• Cayman Islands

• British Virgin Islands (BVI)

• Delaware (US)

• Cyprus

• Ireland

• Luxembourg

• Singapore

Why SPVs Require Accounting Services

• Tax compliance and reporting

• Investor reporting

• Loan/Debt covenants

• Regulatory requirements

• Governance and fiduciary oversight

• Group consolidation

• Transparency for securitisations

• Audits

At Anomaly International, we understand these structures and have the necessary knowledge and experience to prepare accounts for these entities. 

We offer expert SPV accounting services tailored for private equity and structured finance vehicles across multiple jurisdictions. Let us handle your SPV accounting so you can focus on the transaction. 

Please reach out to paul.young@anomalyinternational.com to chat further.