The SPV grew up: how deal-by-deal vehicles became standard kit in private markets

For most of the last decade the special purpose vehicle was a stepping stone. You ran a few SPVs because you could not yet raise a fund, and you stopped once you could. That framing has changed.

The SPVs are not a bridge to the fund. White Star Capital closed a $250m Fund IV in early August, alongside it several new special purpose vehicles resulting in over $350m  raised platforming total. These SPVs run alongside the fund.

That pattern is now common enough to have a rationale. A fund has a mandate, a concentration limit and a fixed life. Deals arrive that do not fit any of the three: a position too large for the fund’s limits, a follow-on the vintage cannot support, a co-investor who wants one name rather than a blind pool. An SPV solves each case without renegotiating the LPA.

The registration numbers point the same way. Cayman-domiciled private funds reached 18,132 in the first half of 2026, with private fund registrations up 43% since the end of 2020. That is a rate of growth in the vehicle count that a stepping-stone story does not explain. An AIMA and Marex survey of 180 managers published in July found 56% of emerging hedge fund managers now put their flagship fund in Cayman, up from 55% in 2024 — the same firms, running more structures.

What changes when the SPV is permanent

If a vehicle is a one-off, its weaknesses are tolerable. You can accept slow formation, a clunky subscription process, a spreadsheet cap table and a custody arrangement nobody has examined, because it happens once.
If you are running twenty, none of that survives contact with reality. Three constraints start to bind.

The first is formation speed. Deals do not wait for a vehicle. If the wrapper takes three weeks, the allocation goes to someone whose wrapper takes days.

The second is investor friction. Every new vehicle that re-onboards the same investors imposes a tax on the people you most want to keep. Reusable verification across vehicles is the difference between an investor base and a mailing list.

The third, and this is the one that has moved this year, is the control environment. On 7 August the FCA published a statement on Annex 1 firms flagging “risks to consumers and markets from unregulated lending often conducted through complex structures, including special purpose vehicles”, noting that firms relying on parent-company controls or off-the-shelf procedures are not meeting the standard, and warning that registration applications should be expected to take longer. Its July review of 242 asset management and alternative investment firms found just over a fifth had no complete business-wide financial crime risk assessment.

Read together, those are not warnings about SPVs. They are warnings about the chain of providers around them. A vehicle is only as regulated as the weakest link holding it up.

The Practical question

If SPVs are permanent infrastructure rather than a phase, they deserve to be procured like infrastructure. That means asking who holds the regulatory permission,  not who partners with someone who does; how quickly a vehicle can be formed and in which jurisdictions; whether an investor onboarded once can invest again without repeating the process; and what happens to the record of ownership when someone wants to sell.

Floww forms Jersey, UK and Delaware SPVs on permissions held inside its own group: Floww Markets Limited, authorised and regulated by the FCA (FRN 980098), a Jersey AIFM, a Jersey-regulated depositary and a US FINRA broker-dealer.

The stepping-stone framing had a useful side effect. It let people treat SPVs as temporary, and therefore not worth engineering properly. That excuse has gone.

Floww Markets Limited is authorised and regulated by the Financial Conduct Authority (FRN 980098). This article is for information purposes only. It is not financial, investment, legal or tax advice and it does not constitute a financial promotion of any specific investment. Capital at risk when investing in private markets.