Special purpose vehicle (SPV) - Financial definition
Financial acronyms
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Concise definition of the term special purpose vehicle
A special-purpose vehicle is a legal entity created to fulfill a delimited, specific and often temporary objective. They are typically used by companies or financial institutions to isolate them from financial risk.
Comprehensive definition of the term special purpose vehicle
In finance, a frequent use is the set-up of special-purpose vehicle by corporations or financial institutions which want to securitize assets. The role of the SPV is to acquire those assets from the corporation or bank, and use them as collateral to the securities it issues in order to finance the acquisition of the assets.
The corporation or financial institution thus manages to get the assets off its balance sheet and may still receive fees for managing the assets.