2.1.1. Special Purpose Vehicle (SPV)

IDevice Icon What is a Special Purpose Vehicle (SPV)?

A Special Purpose/Project Vehicle (SPV) is a legal entity that undertakes a project. All contractual agreements between the various parties are negotiated between themselves and the SPV. An SPV is a commercial company established under the relevant Act of a country through an agreement (also known as memorandum of association) between the shareholders or sponsors. The shareholders agreement sets out the basis on which a company is established, giving such details as its name, ownership structure, management control and corporate matters, authorized share capital and the extent of the liabilities of its members.


The creation of a Special Purpose/Project Vehicle (SPV) is a key feature of most PPPs. The SPV is a legal entity that undertakes a project. All contractual agreements between the various parties are negotiated between themselves and the SPV. SPVs are also a preferred mode of PPP project implementation in limited or non-recourse situations, where the lenders rely on the project's cash flow and security over its assets as the only means to repay debts. The next figure shows a simplified PPP structure. However, the actual structure of a PPP depends on the type of partnerships.

iDevice icon Reflection
What is a Special Purpose Vehicle (SPV)? What are the pros and cons of setting up an SPV to undertake a PP project?

Copyright © 2008 by Transport Policy and Development Section, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).