Special Purpose Vehicles: When Structure Starts Telling Its Own Story

Some business structures exist to build.Some exist to protect.And some exist to separate — risk from reputation, truth from visibility.

The Special Purpose Vehicle (SPV) sits quietly in that third category.

It is not illegal. It is not secret.But it is powerful, because it decides what the world gets to see.

What Is a Special Purpose Vehicle?

A Special Purpose Vehicle is a legally separate entity created for a specific, narrow purpose.

It might exist to:

• Hold a risky asset

• Finance a single project

• Manage debt

• Package investments

• Isolate liability

On paper, it is independent. In reality, it is designed, funded, and directed by someone else.

It is a container for risk, built so that if something breaks, it breaks somewhere else.

Why Companies Use SPVs

SPVs are not villains by default. They are used because they:

• Protect the main business from specific risks

• Make financing easier for large projects

• Allow investors to choose exposure carefully

• Enable complex deals to happen cleanly

Infrastructure, real estate, aircraft leasing, renewable energy and many industries depend on SPVs to function.

Without them, some projects would never get funded.

Structure, in this case, enables progress.

When Structure Becomes Strategy

The danger is not in creating an SPV. The danger is in what gets put inside it and what gets kept outside.

SPVs can:

• Keep debt off the parent’s balance sheet

• Hide losses in separate entities

• Move risk where scrutiny is weaker

• Create distance between decision and consequence

The most famous misuse was Enron.

They created hundreds of SPVs to move debt and failing assets away from the main company. On paper, Enron looked healthy. In reality, the risk was simply wearing a different name.

The structure didn’t fail.The truth did.

Companies That Used SPVs — and Failed

Enron

Used SPVs like LJM and Chewco to hide debt and inflate profits. The collapse in 2001 showed how SPVs can turn transparency into theatre.

Lehman Brothers

Used structures like “Repo 105” and SPV-style vehicles to temporarily remove debt from balance sheets before reporting dates. When markets turned, confidence vanished and so did the firm.

Parmalat

Used offshore SPVs to hide losses and fake assets. When the truth emerged, it became one of Europe’s biggest accounting scandals.

In each case, SPVs were not the crime.They were the costume.

Companies That Used SPVs — and Succeeded

Infrastructure and Energy Projects

Large airports, toll roads, power plants, and wind farms are commonly built through SPVs. Investors know exactly what risk they are taking, and the parent company knows exactly what it is exposed to.

Aircraft Leasing Companies

Each aircraft often sits in its own SPV. If one lease fails, it doesn’t crash the entire business.

Renewable Energy Developers

Solar and wind projects use SPVs so investors can fund one project without inheriting all others.

Here, SPVs are not hiding , they are clarifying.

Are SPVs Still Used Today?

Yes, SPVs are everywhere.

They are used today in:

• Infrastructure financing

• Real estate development

• Venture capital and private equity

• Asset securitization

• Renewable energy

• Aircraft and shipping finance

What has changed is scrutiny.

After scandals, regulators, auditors, and investors look harder at:

• Who truly controls the SPV

• Who bears the real risk

• Whether substance matches structure

SPVs didn’t disappear.They just lost their invisibility.

The Real Lesson

SPVs are tools.

They can build cities.They can hide collapse.

They don’t decide ethics.People do.

The real question is never:

Can we create an SPV?

It is always:

What are we trying not to show?

Because structure is never neutral. It always reveals intent, especially in what it removes from sight.