What is an SPV?
An SPV, which is the initialism of ‘Special Purpose Vehicle’, is exactly what the name suggests: it is a vehicle created for a special purpose. An SPV is usually launched by one investor, or a limited number of investors, to hold a single asset for long-term investment.
SPVs are sometimes called a special purpose entity, investment holding company, personal investment company or something similar, but these are all simply another name for an SPV.
The ‘SP‘ of SPV – the special purpose – can be almost anything, but ‘special’ typically means the purpose is specific, limited or outside the ordinary scope of business. The special purpose could, for example, be to:
- Acquire and hold a specific asset or collection of assets
- Ring-fence potential liabilities or risks
- Securitise assets or debt
- Simplify a future asset transfer
- Pool investments from participants
- Spread risks among participants
- Create a subsidiary of a parent company
The ‘V‘ of SPV – the vehicle – could be any kind of entity or legal arrangement, but a company is one of the most common types. This is because:
- A company is a 'legal person', meaning it can do things a human can do like own property
- The company's owners benefit from limited liability, meaning they are not exposed to any liabilities at the level of the underlying investment
- Specific rules can be set for how the company will be run, including decision-making and economics
Who uses Special Purpose Vehicles and why?
SPVs are used by a broad range of people for an even broader range of reasons. The below are a few examples of who uses Special Purpose Vehicles and why. See our article on Auptimate’s User Types for a more detailed breakdown of the below user types.
To share a promising investment opportunity with their family, friends and wider network.
To diversify their portfolio by investing smaller amounts across a larger number of SPVs.
To pool money with other investors and meet a minimum investment threshold or acquisition price.
To make initial investments and build a track record.
To initiate discussions with potential investors and bring actual investment opportunities to the table.
To acquire and hold each portfolio investment of a Private Equity Fund or Venture Capital Fund.
To make an investment that falls outside their fund’s investment strategy (e.g. to avoid over exposure to a single investment).
To invest alongside others in a follow-on investment where their fund alone has insufficient capital.
- To hold a unique asset that involves multiple segments of ownership (e.g. a yacht with equipment, employees, etc.) to simplify any future transfer.
- To use for legitimate legal, tax, inheritance and other structuring.
To pool investments from their friends, family and other early-stage investors.
To allow multiple smaller investors to combine their money and meet the minimum investment threshold, e.g. the amount required for a SAFE, KISS, CARE or other early-stage investment instruments.
To simplify their start-up’s corporate governance, administration and investor communications by combining different investor rounds and instruments into separate SPVs.
To retain decision-making over which deals to invest in, rather than relying entirely on a Fund Manager or other intermediaries.
To hold a specific asset that may be difficult to transfer and simplify any future transfer by selling the SPV.
What is the AuptiSPV?
The AuptiSPV is a Special Purpose Vehicle created using Auptimate’s online structuring tool. It is:
- Customisable by the user.
- Unique to a specific user’s needs.
- Cloud-native with all documents automatically generated, signed and stored online.
- Launched online in a matter of minutes.
- Managed via Auptimate’s online platform.
Auptimate handles an AuptiSPV’s incorporation, legal documents, investor onboarding, administration, accounting, tax, compliance, investor communications and other back-office functions – all on Auptimate’s online platform. We give investors the peace of mind to focus on what they do best: invest.
AuptiSPVs are typically formed as a private company limited by shares incorporated in Singapore. However, we work with customers who are interested in different types of entity, whether in Singapore or elsewhere in the world. You can learn more about the AuptiSPV pricing here.
What are the key terms of an AuptiSPV?
Number of investors
Between 1 and 50
Type of investors
Accredited Investors
Number of investments
One
Type of investments
Any asset class, but the investment must be known and identifiable when the AuptiSPV is launched
Number of closings
One
Management fee
No
Performance fee
No
Key decision maker
Investors
What's the difference between the AuptiSPV and the AuptiSynd?
The two biggest differences between the AuptiSPV and the AuptiSynd are:
- Decision-making:
In an AuptiSPV, the investors have control over the management of the AuptiSPV’s property, whereas in an AuptiSynd, the lead does (along with the other directors).
- Economics:
Because of that decision-making, an AuptiSPV’s investors collectively share the ultimate profits in proportion to their investment. Whereas in an AuptiSynd, the lead usually (but not always) receives a performance fee, i.e. a share of the profits, which is linked to the performance of the investment and not how much the lead invests.
To compare the AuptiSPV, AuptiSynd and AuptiFund, see our Product Comparison.
What next?
If you’re ready to start your own AuptiSPV, hit the “Launch” button at the top of this page. Or get in touch with us at info@auptimate.com and one of our experts will be more than happy to help.