Special Purpose Vehicles (SPVs) and Special Purpose Acquisition Companies (SPACs) are two financial structures often used to manage investments, mitigate risks, and facilitate large-scale transactions, but they operate in fundamentally different ways.
In comparing SPV vs SPAC, SPVs serve as private entities used for specific investment or asset-holding purposes, while SPACs are publicly listed shell companies designed to take private firms public through mergers.
Questo articolo analizza:
- What are the benefits of SPV vs SPAC?
- What are the risks of a SPAC vs SPV?
- Why are SPVs used in private equity?
- Why use a SPAC to go public?
I miei recapiti sono hello@adamfayed.com e WhatsApp +44-7393-450-837 se avete domande.
Le informazioni contenute in questo articolo hanno un valore puramente indicativo. Non costituiscono consulenza finanziaria, legale o fiscale e non rappresentano una raccomandazione o una sollecitazione a investire. Alcuni fatti potrebbero essere cambiati dal momento della stesura.
What is the difference between SPAC and SPV?
The main difference between a SPAC (Special Purpose Acquisition Company) and an SPV (Special Purpose Vehicle) lies in their purpose and structure.
SPVs are mainly used for private investment structuring, while SPACs function as vehicles for taking companies public.
- An SPV is a legal entity created to isolate financial risk for a specific investimento or project. It’s typically used by private investors, funds, or corporations to hold assets, manage liabilities, or execute transactions separately from the parent firm.
- SPVs are common in private equity, real estate, and venture capital deals.
- A SPAC, on the other hand, is a publicly listed company formed with the sole purpose of acquiring or merging with a private company. It raises capital through an IPO before identifying its target. Once a target is found and approved, the private company effectively becomes public without going through the traditional IPO process.
What are some examples of SPVs and SPACs?
SPV and SPAC examples help illustrate how differently these vehicles function in real-world finance.
- SPV examples:
- Alphabet Inc. (Google) uses multiple SPVs to isolate investments in projects like Waymo and Verily.
- BlackRock and Goldman Sachs establish SPVs for private equity, real estate, or infrastructure deals to separate risk and pool investor capital.
- SPAC examples:
- Virgin Galactic went public through a merger with Social Capital Hedosophia Holdings, a well-known SPAC.
- DraftKings and Lucid Motors also became public companies through SPAC mergers, exemplifying the vehicle’s use in bringing high-growth startups to the stock market.
How are SPACs regulated vs SPV?
SPACs are public and disclosure-driven, while SPVs are private and contract-driven, offering more flexibility but less investor protection.
- SPACs are highly regulated because they involve public capital. In the US, they must comply with Securities and Exchange Commission (SEC) requirements, including IPO registration, financial disclosures, and shareholder approval for mergers. SPAC sponsors also face scrutiny over conflicts of interest, valuation accuracy, and post-merger performance.
- SPVs, by contrast, are privately structured entities with lighter regulatory oversight. Their compliance depends largely on jurisdiction (e.g., Cayman Islands, Luxembourg, or Delaware) and the nature of the investment. SPVs are typically governed by corporate, tax, and anti-money laundering laws rather than securities regulations.
When to use an SPV or SPAC?
Investors and companies use SPVs and SPACs for distinct purposes: SPVs are built for private investment structuring, while SPACs are designed for public market acquisitions.
- Use an SPV to structure private investments, pool capital with co-investors, or isolate risk within a single asset or project. This approach is common in private equity, venture capital, and cross-border real estate ventures.
- Use a SPAC to participate in or sponsor a public acquisition, offering a faster and more flexible route to listing a private company on the stock market.
In essence, SPVs serve private investment management and risk segregation, while SPACs act as public acquisition vehicles bridging private enterprises to global capital markets.
What are the advantages of using a SPAC vs SPV?
A SPAC is typically more suitable for investors and companies aiming to access public markets quickly, while an SPV excels in private, controlled investment environments.
Advantages of a SPAC:
- Faster route to public markets: A merger with a SPAC enables a private company to go public more quickly and with fewer regulatory hurdles than a traditional IPO.
- Pre-determined valuations: Valuations are negotiated directly between the SPAC and the target company, giving both sides greater predictability.
- Broader investor access: SPACs often involve high-profile sponsors, allowing retail and institutional investors to participate in deals that would otherwise be exclusive to private equity funds.
- Reduced exposure to market swings: Because the terms are set privately, companies face less risk from short-term volatility during the listing process.
Advantages of an SPV:
- Greater control and flexibility: SPVs allow investors to structure deals around specific assets, projects, or co-investments, tailoring risk and returns.
- Enhanced confidentiality: Unlike SPACs, SPVs are private entities that can operate discreetly, ideal for high-net-worth or institutional investors.
- Tax and jurisdictional efficiency: SPVs can be formed in favorable offshore o giurisdizioni a bassa tassazione, optimizing global investment strategies.
What are the risks of using an SPV vs SPAC?
SPVs face higher structural and transparency risks, while SPACs are more exposed to market volatility and governance issues.
Both SPVs and SPACs carry distinct financial, regulatory, and operational risks that investors must evaluate before committing capital.
Risks of using an SPV:
- Regulatory complexity: SPVs must comply with multiple jurisdictional rules and reporting standards, which can raise costs and complicate administration.
- Limited transparency: As private entities, SPVs can obscure ownership structures and liabilities if not properly managed.
- Financing vulnerability: SPVs rely on external capital, making them sensitive to changes in credit markets and investor sentiment.
- Reputational exposure: Misuse of SPVs for instance, to conceal debt or transfer losses, can lead to reputational and legal fallout.
Risks of using a SPAC:
- Sponsor misalignment: SPAC sponsors may rush deals to meet deadlines rather than prioritizing long-term value.
- Post-merger underperformance: Many SPAC-acquired companies experience significant valuation drops after listing.
- Investor dilution: Sponsor shares and warrants can dilute the equity of public investors.
- Regulatory tightening: Heightened disclosure and audit rules, particularly in the US, have made SPAC operations more complex and costly.
What is the exit strategy of a SPAC vs SPV?
SPACs offer a defined and time-bound exit through public listing, while SPVs provide a flexible but potentially longer-term private exit.
- SPACs have a defined exit timeline, usually 18–24 months, to complete a merger or acquisition. If they fail to do so, the SPAC is liquidated and investors get their money back with interest. Once a merger is completed, the combined company trades publicly, giving investors a liquid exit via the stock market.
- SPVs, on the other hand, follow a customized exit plan based on the underlying asset or project. Returns are realized when the asset is sold, refinanced, or reaches maturity. This could take years and often provides no immediate liquidity until the investment concludes.
Conclusione
Both SPVs and SPACs serve valuable but distinct roles in modern finance.
SPVs provide private investors with control, flexibility, and risk isolation for targeted projects, while SPACs offer a streamlined path for private companies to enter public markets.
The choice between them ultimately depends on whether the goal is private asset management or public capital access.
For global investors, understanding how each vehicle operates, and the risks tied to governance, regulation, and transparency, is essential to structuring sound, strategic investments.
Domande frequenti
What is the difference between SPE and SPV?
An SPE (Special Purpose Entity) is a broader term that includes all forms of legally separate entities created for a specific objective.
An SPV is a type of SPE, typically formed for a single, narrow purpose such as owning an asset or financing a project.
Essentially, all SPVs are SPEs, but not all SPEs are SPVs.
Why are SPACs no longer popular?
SPACs lost popularity after the 2021 boom due to poor post-merger performance, increased regulatory scrutiny, and rising investor skepticism.
Many high-profile SPACs underperformed once their target companies went public, leading to capital losses and reduced trust in the model.
What is the 80% rule for SPAC?
Il 80% rule requires that the target company a SPAC merges with must have a fair market value of at least 80% of the SPAC’s trust assets at the time of acquisition.
This rule ensures that the SPAC fulfills its purpose of conducting a meaningful business combination rather than a small or unrelated deal.
Siete afflitti dall'indecisione finanziaria?
Adam è un autore riconosciuto a livello internazionale in materia finanziaria con oltre 830 milioni di visualizzazioni di risposte su Quora, un libro molto venduto su Amazon e un contributo su Forbes.
