Special Purpose Vehicle (SPV)

A Special Purpose Vehicle (SPV) is a separate legal entity created for a specific purpose, often to isolate financial risk. Businesses or investors use SPVs to handle particular projects, manage assets, or undertake investments without affecting the parent company's finances. For instance, if a company wants to invest in a new real estate project, it might create an SPV to hold that investment. This way, if the project fails, the parent company is protected from losing its other assets. SPVs are common in finance, real estate, and infrastructure due to their ability to streamline complex transactions.