Structuring of Special Purpose Vehicle (SPV) Within the Scope of Public-Private Partnerships (PPPs) Under Latvian and Turkish Law

Abstract

Abstract The establishment of a specific project company most commonly known as a Special Purpose/Project Vehicle (SPV) is a key feature of most Public private partnership (PPP) transactions in Turkey. According to the competent authority, the SPV is considered to fall under the definition of a Securitisation Special Purpose Vehicle (SSPE) then it should not be considered a financial sector entity. In order to meet the increasing infrastructure needs of Turkey, it is generally accepted necessary to utilise alternative financing models to be provided with the participation of the private sector in addition to the use of public resources. In this framework, PPPs model, which has been widely used in realisation of infrastructure investments in developed and developing countries in recent years, is also applied in Turkey. SPV PPP risks, income and losses usually are shared in proportion to the shares of a public partner and a private partner that they have in a joint venture. However capital companies also bid for the tender opened by the contracting public authority according to the relevant laws. If the tender is awarded to a business partnership or a capital company according to the relevant law, the documents regarding the establishment of the special purpose vehicle shall be requested. Generally, the SPV structured as a joint stock company. SPV is a feasible and an effective option for the lenders and financiers, who take into account the cash flow of the project and security over its assets for the repayments of the debts.