Special Purpose Vehicle (SPV)

An entity created to undertake a single task or project in order to protect the shareholders with limited liability, often used for limited or non-recourse financing. In establishing a project consortium, the sponsor or sponsors typically establish a private partner in the form of a special purpose vehicle (SPV) which contracts with the government. The SPV is an entity created to act as the legal manifestation of a project consortium with no historical financial or operating record which the government can assess. An SPV/special purpose entity (SPE) is a legal entity with no activity other than those connected with the project. It also includes “private partner” or “project company”.