PPP Project-Special Purpose Vehicle (SPV)

What you should know about PPP Project-Special Purpose Vehicle (SPV)

Public-Private Partnerships are a very important tool for any Governmental strategies and initiatives for any long-term investments.

The PPP framework is a tool for increasing the value of the financial investments and investigating, it presented a model for a project financed through a PPP agreement between a government institution and a private party which called a special purpose vehicle (SPV).

This SPV is a distinct company with its legal status and an asset/liability structure, generally holding the off-balance sheet. The SPV can take the form of limited partnerships, trusts, corporations, or limited liability companies coordinate, and Collaborate between the different stakeholders (as shown in the diagram below) working through its different phases and stages.

Although SPVs can have their employees and carry out tangible business operations, the entities are first and foremost an off-balance-sheet tool. The off-balance sheet status means that companies can change the SPV's overall framework of asset and liabilities without those changes carrying over to the financial statements of the primary company.

The SPV allows for improved financing and a greater degree of operational control for the private agent.