Are you getting the most out of your global SPVs?

Growing numbers of alternative funds are expanding, acquiring assets overseas and, in turn, seeking tax-efficient asset protection structures through the creation of special purpose vehicles (SPVs).

This means the volume of entities being managed and monitored by C-suite professionals is rising, adding to operational, compliance, risk and cash management concerns.

Many alternative managers have thousands of SPVs under management comprising different company types, asset classes and jurisdictions. The sheer size of SPV books is causing pain at the top. Clients are increasingly telling us that it’s overwhelming to collectively manage and oversee so many entities in so many jurisdictions.

SPV management and centralised services made easier – the cash management angle

What we’re also finding is that CFOs are not necessarily aware that they could be achieving more monetary value out of their SPVs – effectively making money as they sleep.

Given that each SPV generates some degree of cash movement, fund managers tell us they would love to see where their aggregate cash is sitting. With inflation and interest rates rising, arguably this money could be better used overnight through a sweep at a higher rate.

Rather than deal individually with every SPV, our clients are finding that when they can see everything at once on an “SPV Prime” dashboard – rather than on a cumbersome Excel spreadsheet – they have a much clearer idea of what they’re dealing with.

That is why we’re working with clients to provide them with bespoke SPV dashboards where they can see in a click their aggregate cash exposure in corresponding jurisdictions. Operational managers can then decide where to place that money to gain the most value.

Existing relationships with banks could spark incentives for short-term instruments offering better rates for 30 days. However, funds then have the freedom to swap if, for example, another bank is offering a different rate on a 60-day product. As more funds fully leverage their SPV data and banks are aware of this trend, more competitive offers could come to market.

There is also the question of leverage when there is individual borrowing made through SPVs that require granular loan covenants, margin calls or netting arrangements. This is particularly topical for managers and their corporate bankers or P2P lenders.

As it stands, most funds are not enjoying any of these SPV benefits; instead, they leave the aggregate funds sitting in individual accounts. There is however a logical reason for this. Having to monitor and aggregate data for thousands of entities in the traditional way is arguably too onerous and costly a task. It would call for more people and more Excel spreadsheets, increasing management fees.

When an SPV event occurs, such as the formation of a new entity, an exit or liquidation, you have the hot topic of cash management to contend with. Having a centralised SPV dashboard can help funds gain oversight and control over who they’re banking with, what their terms are, additional cash and its outflows.

In-house SPV compliance and end-of-Life liquidations made easier

Operational managers and in-house counsel have a lot on their plates; knowing they can have an SPV compliance health check gives them one less thing to worry about. For example, they can ensure their SPVs are in good standing in all their markets, from Delaware to Singapore. Our software can provide a host of services, such as aggregating all the certificates of good standing, alerting managers when the next board meeting is and preparing for upcoming filing obligations.

There are other aspects of SPV management such as end-of-life private capital funds and respective SPVs that fund managers are having to address (such as illiquid assets). In the coming weeks and months, we expect to have more detailed discussions with clients on how they can expedite and close out these existing structures in a cost-effective manner.

Why it’s time to talk SPVs with Intertrust Group

As part of CSC, our teams of more than 7,500 professionals around the globe are well-equipped to deliver complete, end-to-end SPV solutions across all private capital asset classes and all locations. Leveraging our SPV prime technology through data aggregation, analytics and reporting can ease the complexity of SPV management.

By coordinating centrally and delivering locally, you can focus on what you do best. We provide:

• SPV domiciliation, registered agent, accounting – including management accounting, consolidation, and financial reporting
• Bank account management – including reconciliations daily, monthly, or quarterly
• Cash projections and cash flow management
• Payment services
• Directorship services
• Regulatory reporting
•  Compliance calendar and dashboard