Types and functions of special purpose vehicles in infrastructure megaprojects

Special Purpose Vehicles (SPVs) are legal instruments, widely employed in infrastructure megaprojects. SPVs support specific transactions, including public-private partnerships and project finance. Despite the widespread use of SPVs, there is limited research concerning their importance and role for project governance. Furthermore, project studies don't distinguish between the different types of SPVs. This paper employs a grounded theory approach to understand the four types of SPVs and their functions for transactions in infrastructure megaprojects. This paper shows that specific types of SPVs, called project companies and industrial vehicles, are relevant for the formal governance of infrastructure megaproject. The paper describes the hybrid nature of SPVs, being between corporations and contracts, and discusses the implications for the transaction cost theory. A better understanding of the types and functions of SPVs will facilitate and enhance the design and negotiation of the formal governance of infrastructure megaprojects.