SPV-funded BEE deals are 'sure to fail'

March 2, 2009

Special purpose vehicles (SPVs) - financial arrangements often used in black economic empowerment (BEE) deals - are unsustainable and do not work but funders continue to use them because of the fees these structures generate.

Ajay Lalu, a partner at Bravura Economic Empowerment Consulting, said on Friday that SPV models were a failure because they were premised on increasing share prices rather than cash flows.

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