An SPV is a separate legal entity, which means it has its own balance sheet and assets. Financial reporting and filings of financial statements are also managed separately to the main business.
In the past, the flexibility of SPVs has meant they were vulnerable to misuse. There were some particularly infamous cases around the time of the financial crisis. However, there are many ethically sound and financially responsible reasons for both large, established organisations and rapidly scaling companies to set up SPVs.
With effective risk management and appropriate transparency, SPVs can be highly beneficial investment tools. Read our blog about managing SPV accounting.
SPVs can be attractive options for business owners and investors for many reasons related to balancing risk with financial returns. In particular, they may be looking to:
SPVs are used across many industry sectors. These include:
Individual investors, trusts, limited partnerships, family offices and corporations may choose to set up an SPV. This could be to invest in a portfolio of start-up equity, real estate, alternative assets, or other relatively high-risk ventures or projects. They can be an effective way to raise capital and control risk while maintaining flexibility and privacy.
Find out more about how AccountsIQ’s Private Equity & Venture Capital Accounting Software can help manage a diverse portfolio of investee entities.
Investment in renewable energy is soaring. But there are also significant political, regulatory and financial risks inherent in owning, developing and managing such complex, global operations. The early exploratory stages of the project are often the most risky and SPVs are one of the tools the renewable energy sector uses to mitigate and transfer risk.
Find out more about how AccountsIQ’s Renewable Energy Accounting Software helps renewable energy investors and operators manage a complex portfolio of SPVs.
Read our blog about why AccountsIQ is the finance system of choice for renewable energy companies.
SPVs can be set up to invest in and manage a diverse residential or commercial property portfolio. This arrangement can make it easier to raise finance and, in some circumstances, there are potential tax and other financial benefits. SPVs can also provide more flexibility when it comes to future re-balancing of the property portfolio.
Find out more about how AccountsIQ’s Property Management Accounting Software provides effective oversight of property portfolio investments.
Finance teams tasked with managing a complex portfolio of SPVs face multiple challenges, including multi-currency and inter-company transactions. Business leaders and other stakeholders will also require group consolidation software and detailed, multi-dimensional management reporting to ensure they have the data they need to run their business and investment interests effectively. That can be a huge undertaking and is why AccountsIQ’s award-winning Cloud accounting software has rapidly become the financial management platform of choice for finance teams managing multiple SPVs.
“We adopted AccountsIQ’s financial management software because the key to successful commercial asset management is the ability to see KPIs at a glance and across the whole portfolio.”
Ray O’ Neill, CEO of renewable energy consultancy, Fincovi