For our current project in Morecambe we set up an SPV (Special Purpose Vehicle) with our joint venture partner. Setting up an SPV can be a complex process that requires careful planning and execution. So we thought we’d share our top tips that we have learnt to help get you get started:

Before setting up an SPV, you need to determine its purpose and structure. SPVs are typically used to isolate financial risk and can be structured as a limited liability company (LLC), a trust, or a partnership. Consult with legal and financial advisors to determine which structure best suits your needs.

Identify the key stakeholders in the SPV, such as investors, managers, and service providers. Consider the roles and responsibilities of each stakeholder and ensure that their interests are aligned with the objectives of the SPV.

Develop a business plan that outlines the objectives, strategy, and financial projections of the SPV. This will help you to assess the feasibility of the project and to secure financing.

Obtain Financing. SPVs are typically funded through equity, debt, or a combination of both. You will need to identify potential investors and lenders and negotiate favourable terms.

Establish a governance framework that defines the roles and responsibilities of the board of directors, management, and other stakeholders. Ensure that the SPV complies with all applicable laws and regulations. We used the guidance of specialist lawyers to support this aspect of our latest SPV.

Develop operational procedures for the SPV, such as accounting, reporting, and risk management. Establish systems and controls to ensure that the SPV operates efficiently and effectively.

Maintain transparency with stakeholders by providing regular updates on the performance of the SPV and any material changes to its structure or operations.

By following these top tips, you can set up an SPV that is well-structured, well-financed, and well-governed.