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What is a Special Purpose Vehicle?


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What is a Special Purpose Vehicle?

  1. 1. WHAT IS A SPECIAL PURPOSE VEHICLE (“SPV”)? An SPV is an entity set up to participate in a transaction. It usually has one specific objective. In the Cayman Islands an SPV can either be a Company, Trust, or Partnership. The vehicle most commonly used is the Company. How can an SPV be used? Although there are many uses for an SPV, a common area is in a cross border lease transaction. These structures can be used in the financing of any big ticket assets, such as airplanes, trains, buses, industrial facilities or communication equipment. In a typical structure an asset is purchased by an SPV Company through a number of loans which have been provided by a lender or a syndicate of lenders. The asset is then ultimately leased to the end user of the assets, through a number of leasing arrangements.