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Vehicle Selection
Choice between company, limited liability partnership and trust, onshore or offshore, against the tax, funding and exit profile of the purpose the vehicle will serve.
A special purpose vehicle exists to hold one risk, one asset or one transaction, and to keep that risk away from the rest of a group. We build vehicles that are clean enough to fund, ring fenced enough to protect the parent, and simple enough to unwind when the purpose is served.
The use decides the vehicle. An acquisition vehicle is built to borrow and to merge. An infrastructure vehicle is built to hold a concession and to be financed. A holding vehicle is built to sit still and to be sold. We build for the use, not for a template.
Choice between company, limited liability partnership and trust, onshore or offshore, against the tax, funding and exit profile of the purpose the vehicle will serve.
Formation, the charter documents, the capital structure and the shareholder or partner arrangements that govern control from day one.
The separateness covenants, the limited recourse language and the conduct rules that keep the vehicle independent of the parent and remote from its insolvency.
Equity, debt and hybrid funding, the security package over the vehicle assets, and the intercreditor terms where more than one lender is involved.
Board composition, reserved matters, independent director where required, and the administration that keeps the vehicle observably separate from its sponsor.
Sale of the vehicle, distribution of its assets, repayment of its funding and an orderly wind up once the purpose is complete.
A special purpose vehicle has a beginning, a working life and an end, and the documents are written for all three at once. The wind up is drafted on the day the vehicle is born.
Define the single purpose, then choose the form, the jurisdiction and the capital structure that fit it.
Form the vehicle, settle the charter and capital documents and put control arrangements in place.
Write the separateness, limited recourse and conduct covenants that protect the parent and reassure lenders.
Raise equity and debt, grant the security package and settle the intercreditor position.
Sell, distribute, repay and wind up the vehicle cleanly once the purpose is served.
A vehicle is not protected because the documents say it is separate. It is protected because it behaves as separate, keeps its own accounts, observes its own formalities and never lets the parent treat it as a pocket. We write the rules and we set the conduct that makes the separation real.
Short, direct, on the record.
A special purpose vehicle is a company, limited liability partnership or trust created to hold a single asset, run a single project or carry a single transaction, separate from the rest of the group that owns it. Common uses include holding an acquisition target, owning and financing an infrastructure concession, holding real estate, isolating a joint venture and housing a financing or securitisation. The common thread is the wish to keep one set of risks and assets away from everything else.
Ring fencing is the set of legal and operational measures that keep the vehicle independent of its parent and remote from the parent insolvency. It includes separateness covenants, limited recourse and non petition language in the finance documents, independent governance where required, and the operational discipline of keeping the vehicle accounts, contracts and formalities genuinely separate. The documents create the fence, but the day to day conduct is what keeps it standing.
There is no single answer, because the right form follows the purpose. A company is usually preferred where the vehicle will borrow heavily, grant a wide security package or eventually merge, since the lending and merger machinery is well settled for companies. A limited liability partnership is often preferred for holding and joint ownership where flexibility and a lighter compliance load matter more. We choose against the funding, tax and exit profile of the specific purpose.
Funding is usually a mix of equity from the sponsor and debt from one or more lenders, sometimes with hybrid instruments in between. The debt is typically secured over the vehicle assets and, in project finance, supported by limited recourse to the sponsor. Where more than one lender is involved, an intercreditor arrangement sets the ranking and the enforcement order. The funding structure is designed so that raising money does not break the ring fence.
A well structured vehicle has its exit written at the start. Depending on the purpose, the vehicle is sold as a whole, its assets are distributed, its funding is repaid and it is then wound up cleanly. The aim is to return value to the owners without leaving residual liabilities behind in the group. Planning the unwinding at formation avoids the cost and delay of unpicking a structure that was only ever designed to be created.
AIF formation across Category I, II and III under SEBI
Equity and contractual joint ventures with governance built to last
Schemes of arrangement and amalgamation before the Tribunal
The cleanest outcomes are built into the structure at the start, not negotiated out of disputes later.