Project Finance · SPV · Structured finance
Do you have a clearly defined project — an asset acquisition, infrastructure, a renewable energy portfolio, a real estate development — that needs funding without exposing your group or parent company? Collaboration Capital structures the set-up of a special purpose vehicle (SPV), ring-fences the project's risks and places them with the right funders — project finance banks, infrastructure funds, institutional investors. SPV project finance from EUR 2 to 200 million, in France and internationally.
01 · Purpose and principles
A special purpose vehicle (SPV) is a legal entity dedicated to a project that can be ring-fenced — acquiring, building or operating an asset or infrastructure. It carries the project: it owns the assets and holds the operating and financing contracts. It has no other purpose. The benefit: the project's risks are contained within the SPV and kept separate from the risks of the group or parent company. Lenders are repaid from the cash flows generated by the project itself, not from the group's balance sheet.
Project finance vs corporate finance. In corporate finance, the group borrows and lenders are repaid from the group's overall debt capacity. In project finance, the borrowing sits in the SPV and lenders are repaid from the project's cash flows — and only from the project's cash flows (non-recourse or limited-recourse finance). It is a difference in the repayment base, and it shapes the legal structure, the allocation of risk and the security required.
Risk ring-fencing. The parent group is not liable for the SPV's debts beyond the equity it has contributed (unless it has given an explicit guarantee). The SPV's creditors only have recourse to the SPV's assets and cash flows.
Stand-alone bankability. The SPV borrows against its own cash flows. A profitable project can be financed even if the parent group's financial structure is weak — and vice versa.
Transparent accounts. The SPV produces its own statutory accounts, consolidated into the group if the group controls it, but easy for project funders to read.
Controlled tax efficiency. The SPV can be structured to remove tax barriers — double taxation, withholding tax — when it brings in foreign institutional investors.
02 · Challenges and use cases
Every SPV starts with a specific need. These are the seven use cases we see most often.
The SPV becomes the owner and operates the asset (or grants a concession over it). The financing is backed by the lease or operating contracts signed with the tenants or the operator.
Timeline: 6–12 months of lender review
The SPV carries the construction debt that funds drawdowns during the works, then refinances on completion into long-term debt tied to the operating contracts (PPAs, leases).
Timeline: 12–18 months of lender review + construction period
The operating SPV separates operational risk from financing risk. Funders accept an operator with a weaker balance sheet because the SPV adds a layer of protection.
Timeline: 3–6 months of structuring
The SPV becomes the legal owner of the asset. The lenders' security covers this ring-fenced asset, without dilution by the group's security.
Timeline: 2–4 months of legal documentation
The SPV takes on several tranches — senior, mezzanine, junior — which absorb shocks in waterfall order. It increases debt to the benefit of the group's equity.
Timeline: 6–9 months of financial structuring
The SPV provides clear governance and audited accounts that attract long-term investors. It makes it easier to sell or refinance the project.
Timeline: 3–6 months to set up the shareholding
The SPV structures the project's income to reduce withholding tax and double taxation. It relies on bilateral tax treaties or sets up a multinational structure.
Timeline: 2–3 months (with a tax adviser)
03 · Legal structuring and risk allocation
An SPV is built in five layers: governance, the asset, the operating contracts, the debt and the lenders' security. Each layer breaks down the risks and allocates each one to the party best able to bear it.
Cash flow waterfall. Each month, the project's cash flows (rent, sales, revenue) are paid into a secured project account. The money then flows down in a fixed order: first salaries and operating costs, then insurance and security costs, then senior debt interest and repayments, then mezzanine, then reserves, and finally dividends to shareholders. What is paid out at each level determines what can flow to the next — and protects the higher-ranking tranches from any shortfall.
Shared risks vs concentrated risks. An SPV project succeeds when each risk is borne by the party able to control it. The parent group bears governance risk (it runs the project); the senior lender bears repayment risk (the debt), but only subject to cash flow cover evidenced by the DSCR (debt service coverage ratio). The infrastructure fund bears the residual risks (force majeure). This allocation lets each party price its capital appropriately — the senior lender accepts a low interest rate because its risk is low; the infrastructure fund requires a higher return because its residual risk is high.
04 · Legal frameworks and tax regimes
The choice of legal form depends on the investor profile, the applicable tax rules and the complexity of the project. Here are the four most common options under French law.
SARL or EURL (French private limited company, for French-only projects). A simple, low-cost structure. The natural choice if the project is 100% French and the parent group is a French buyer. Subject to French corporation tax (IS). Limitation: hard to bring in future investors without converting the company.
SAS (French simplified joint-stock company, for shareholder flexibility). Articles of association can be drafted freely. The natural choice if the SPV must bring in several shareholders with different rights (blocking votes, exit rights, etc.). Subject to French corporation tax (IS). More open than the SARL to a later change of control.
SA (French public limited company, for foreign investors). Required by some institutional funds. Involves heavier governance (board of directors). Worth considering for projects above EUR 50 million that bring in DFIs (development finance institutions, including multilateral development banks).
Offshore or intermediate holding structure (tax planning). Relevant where foreign investors are subject to withholding tax. The SPV can be located in Luxembourg, Malta or Cyprus to reduce withholding tax, while a management holding company remains in France. Only for transactions above EUR 100 million that justify it.
Tax regimes. The SPV is generally subject to corporation tax at the standard rate (25% in France). Some special regimes apply — exemptions in tax-free zones, energy tax credits, accelerated depreciation for rental property. Lenders' offer documentation reviews these schemes and quantifies their impact on the DSCR.
Transfer of ownership. The SPV must establish its title to the project asset before financial close. Lenders require a copy of the title deed, a planning certificate (certificat d'urbanisme) and a legal opinion confirming there are no restrictive easements.
05 · The parties involved
An SPV project involves around ten parties — each with its own role, timing and conditions. Knowing them is how you build a realistic timetable.
The project's initiator and the SPV's ultimate owner. It appoints the SPV's board and approves its strategy.
Where the project has a construction phase: it builds the asset and is answerable for its compliance and performance. Its commitment is backed by a performance bond.
Takes on long-term operating responsibility. Lenders often require a strong counterparty — an established operator with a track record.
Senior lenders require security over the cash flows and assets. Mezzanine lenders and infrastructure funds accept residual risks.
Long-term equity investors (the SPV's own funds). They require a say in governance and spending decisions.
Lawyers (M&A, finance, construction), auditors (accounts, ratios), engineers (technical due diligence). Essential, but how many you need depends on the complexity.
06 · Timetable
The median timetable for an SPV is 9–18 months, depending on the project's complexity and the quality of the operating contracts. Here are the phases, which overlap.
Nature of the project (acquisition, construction, operation), identification of the cash-generating flows, intended shareholding structure. Deliverable: project orientation note.
The SPV's legal form (SARL, SAS, SA), identification of shareholders (sponsor, infrastructure funds, DFIs), shareholders' agreements, signing authorities. Deliverable: annotated draft articles of association.
Signing of leases (anchor tenants), PPAs (power purchase agreements for renewables), EPC and O&M agreements. This is the most critical phase: lenders read these contracts first.
Technical audit of the asset (building surveys, electrical compliance, energy yield), environmental audit (pollution, soil, waste), tax audit if there are foreign investors.
Utilisation assumptions (occupancy rate for real estate, energy yield for renewables, operating costs), cash flow waterfall, calculation of the DSCR and other ratios. Deliverable: model reviewed by the auditors.
Drawing up the shortlist of funders (banks, infrastructure funds, mezzanine lenders), presenting the teaser and then the full documentation. Requests for non-binding offers (term sheets).
Questions on the financial model, assumptions and security. Site visits. Agreements in principle — firm offers with detailed conditions precedent. Duration: 2–4 months.
Credit agreements, security (pledges over assets, assignment of contracts), covenants (minimum DSCR, ratios), reserve accounts, third-party consents (tenants, EPC, O&M).
Final legal opinions, insurance in force, transfer of ownership completed, all third-party consents obtained. Signing of the credit agreements and drawdown of funds.
Overlaps and critical path. The phases run in parallel: legal structuring starts in phase 1, technical due diligence begins before phase 3, and approaches to funders can start before the key contracts are secured if the risk is under control. The factor that pushes the timetable beyond 18 months is almost always the lack of a confirmed O&M counterparty — lenders will not assess a project if they do not know who will operate it.
07 · Returns and financing ratios
A bankable SPV project is not simply a profitable project — it is one whose cash flows comfortably cover debt repayment. That cover is measured by four key indicators, which lenders test against every market assumption.
DSCR (debt service coverage ratio). The ratio of cash flow available for debt service (CFADS) to annual debt service (interest + principal). Lenders typically require a DSCR of at least 1.20x — meaning cash flows cover debt service with at least a 20% margin. In a year when the DSCR falls to 1.05x, cover is thin and risk rises.
CFADS (cash flow available for debt service). The project's EBITDA less taxes and maintenance capex — the actual cash available to repay the debt. It differs from reported EBITDA because it excludes non-cash items (depreciation, provisions).
Leverage. The ratio of net debt to the project's EBITDA (or to the lower EBITDA at the start of operations if the project is ramping up). Leverage of 4.5x means the debt represents 4.5 years of EBITDA. Senior lenders generally ask for leverage of 4.0x or less; mezzanine lenders accept up to 5.5–6.0x.
Debt sculpting (repayment profile). The shape of the debt over time. A straight-line profile (the same repayment each year) is rarely acceptable, because project cash flows drop towards the end of the operating life (maintenance rises, revenue declines). The profile is adjusted so that the DSCR stays at or above 1.20x over the whole term.
These four indicators are never looked at in isolation: lenders examine how they behave under several scenarios — base case (central assumptions), downside case (output -10%, costs +10%) and upside case. It is under the downside scenario that the DSCR must remain comfortable; otherwise the structure cannot withstand shocks.
08 · Sectors
Although an SPV can be used in almost any sector, there are six where it is the de facto structure — because cash flows are contracted over the long term and funders are familiar with them.
Physical assets, long-term indexed power purchase agreements (PPAs), stable subsidies, predictable operating costs. This is the most mature SPV market.
Concession contracts with stable public authorities, regular cash flows, inelastic demand. Lenders readily accept high leverage.
Long-term leases with high-quality tenants (social housing providers, major retailers), predictable income. Standard security (mortgage over the building).
Long-term lease contracts with hyperscalers or operators, stable cash flows, controlled obsolescence. Currently in strong demand from infrastructure funds.
Public concession contracts with states or local authorities, equalised revenue, political risk covered by sovereign credit insurance.
Feasible if the asset can be leased long term to an identified, creditworthy tenant. It is the rent that underpins the financing, not the operating cash flows.
09 · Advantages and limitations of the SPV structure
The SPV is not a universal structure. Its value lies in ring-fencing risk and in the leverage it allows. Its limitations are administrative and tax-related. Here is a side-by-side view of both.
When to prefer a corporate or hybrid structure. If your project is small (< EUR 15 million) and the group has a strong credit standing, borrowing directly at group level is quicker and cheaper. If the project carries very significant residual risks — force majeure, uninsurable political risk — the SPV creates a false sense of security: lenders will ask for a group guarantee in any case. If the funding need is one-off and will not grow (equipment purchase, small acquisition), short-term debt at group level is enough.
10 · Frequently asked questions
An SPV is a subsidiary, but one dedicated to a single project, with governance that reflects that single purpose. An ordinary subsidiary can carry several projects and businesses. The SPV produces stand-alone accounts that are easy to audit — which makes it easier to raise finance. An SPV remains a subsidiary of the group for consolidated accounting purposes.
Yes, if the project's cash flows comfortably cover the debt and the project asset can be used as security. Senior lenders may accept no guarantee if the DSCR is at or above 1.25x and the security covers the project asset. Mezzanine lenders often ask for a limited group guarantee as a precaution.
As a rule of thumb, EUR 10 million. Below that, administrative costs weigh too heavily (lawyers, auditors, insurers). Between EUR 10 and 20 million, an SPV becomes worthwhile if cash flows are stable. Above EUR 50 million, it is almost standard.
Typically between 9 and 18 months, depending on the project's complexity and the quality of the key contracts. The biggest factor is the lack of a confirmed O&M counterparty — if you do not know who will operate the asset, lenders will not even start. With all key contracts in place, 9–12 months is achievable.
A pledge over the real or personal property assets, assignment of the operating and revenue contracts (leases, PPAs, O&M contracts), charges over the reserve accounts, a mortgage where there is real estate, and a pledge over the SPV's shares held by the group. Each asset class requires a specific form of security.
Yes, if the project's cash flows fall during operations (energy output below forecast, low occupancy for real estate). The DSCR then drops and refinancing becomes impossible. That is why lenders require downside scenarios with safety margins.
Yes, this is common. An infrastructure fund buys an SPV from the group: the assets, contracts and debt pass to the new owner. Operating contracts generally require the counterparty's consent (change of control clause). The financing can be refinanced under the new owner if the ratios hold.
An SPV in France is subject to French corporation tax (25%). Dividends paid to a foreign investor may be subject to withholding tax (12.8% within the EU where a tax treaty applies, 25% outside the EU). This withholding tax can be reduced by locating the SPV in a country that has signed a tax treaty. DFIs (multilateral banks) are often exempt because of their public-institution status.
No, it is not a requirement. Collaboration Capital does not ask for exclusivity — you remain free to consult other advisers and to withdraw your file at any time. The firm is registered with ORIAS, the French register of insurance and banking intermediaries, under no. 25000696 as a broker in banking transactions and payment services (IOBSP).
A first 45-minute conversation with a partner to assess your project's bankability, identify obstacles and map the funders you can approach — with no commitment. As an independent adviser on acquisition, sale and financing transactions, we can help you structure your SPV project finance.
Reply within 24 business hours
Confidentiality guaranteed — NDA on request
IOBSP broker registered with ORIAS under no. 25000696