Company types
Special Purpose Vehicle (SPV)
An SPV is a dedicated legal vehicle formed to hold a single investment or a defined set of assets, often used to pool capital and isolate risk. Allocators evaluate SPVs through governance rights, reporting, fees, and alignment of decision authority.
SPVs are commonly used for single-asset investments, co-investments, and special situations where investors want targeted exposure without committing to a blind-pool fund. For allocators, the key is not the vehicle—it’s control, transparency, and economics.
How allocators define SPV quality
They segment SPVs by:
- Governance: who controls decisions, amendments, exits
- Reporting: frequency, depth, valuation approach
- Fee stack: admin fees, carry, platform fees, hidden costs
- Legal protections: information rights, transfer rights, conflicts clauses
- Liquidity: secondary transferability and restrictions
Allocator framing:
“Who controls the asset, what do we see, and what do we pay?”
What slows decisions
- Fee layering and unclear economics
- Weak governance or unilateral GP discretion
- Limited reporting and valuation opacity
- Conflicts not disclosed
Common misconceptions
- “SPV equals simple” → fee and governance stacks can be complex.
- “It’s just a wrapper” → governance terms can materially change risk.
- “Co-invest SPVs are always better” → not if controls and fees are weak.
Key allocator questions
- Who has decision rights and what requires investor consent?
- What is the full fee stack?
- What reporting is guaranteed and how is valuation done?
- What are transfer restrictions?
- How are conflicts handled?
Key Takeaways
- SPVs are about governance + fee clarity
- Transparency determines institutional comfort
- Decision rights matter as much as asset quality