Private Markets · Ventures
SPV Mechanics
One position, one vehicle, one set of investors.
A special purpose vehicle is a company or partnership formed to hold one investment for the investors who chose it. Wesvel forms them where an allocation is larger than a fund should hold, where an issuer requires a single holder of record, or where investors want exposure to a specific deal without the rest of the venture book. The mechanics are deliberately simple and deliberately separate.
Formation and funding
The vehicle is formed in a jurisdiction chosen for the position and its investors, with its own governing documents, bank and custody accounts, and a management agreement appointing Wesvel. Investors subscribe for interests in the vehicle, which uses the proceeds to make the investment. Subscriptions are sized to the allocation; the vehicle does not hold uninvested cash beyond its expense reserve.
Administration
An independent administrator maintains the register of investors, processes subscriptions and distributions, and prepares financial statements. Custody of any tokens sits with the same institutional custodians the funds use. Where the vehicle’s size warrants, it has its own auditor. Fees and expenses are those set out in the vehicle’s documents and are charged to the vehicle alone.
Through the life of the position
Investors receive periodic reporting on the position: valuation under the written policy, material developments, and any actions taken. Decisions about the position, voting, follow-on participation, hedging where possible and exit, are made by Wesvel under the management agreement and reported. Where the fund also holds the position, allocation between them was fixed by policy at commitment.
Realization and wind-up
When the position is realized, in cash or in kind, proceeds are distributed to investors net of expenses and any fee described in the documents, and the vehicle is dissolved. Where a position becomes liquid in tranches, distributions may follow the same pattern. A vehicle whose position is written off is wound up at the fund’s expense once counsel confirms there is nothing to recover.
Practice
How Wesvel approaches it
- 01Each vehicle has its own accounts, administrator and documents; assets are never commingled with the fund’s or another vehicle’s.
- 02Allocation between fund and vehicle is fixed by written policy at commitment and disclosed to both sets of investors.
- 03Fees and expenses are set out in the vehicle’s documents and charged only to that vehicle.
- 04Conflicts between a vehicle’s position and the firm’s other activities are disclosed in writing at formation and on any material change.
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