Around £200 million has been wiped off the value of a company seeking to make hypersonic flight a reality.
Reaction Engines, based in Abingdon, Oxfordshire, was founded in 1989 by three propulsion engineers from Rolls Royce. It has developed a Synergetic Air Breathing Rocket Engine – SABRE – which contains precooler technology able to deal with extreme temperatures found at incredibly high speeds.
Chaired by Philip Dunne, a former defence minister, the company has been led since 2015 by Mark Thomas, who joined following a 25-year career at Rolls Royce and moved its focus from pure research and development to industry sponsorship.
Thomas told BusinessCloud in 2020: “We’re looking beyond the next Concorde… we’re looking to go hypersonic – which is more than double the speed again. And that’s a completely different threat domain.”
The company has worked with the UK Space Agency and European Space Agency, with the UK government investing £60m in SABRE as part of a ‘strategic approach to space’. The propulsion tech could make space access far easier and more affordable.
Early last year it raised £40m of additional equity, taking its total funding to £150m. Shareholders include BAE Systems and Rolls-Royce Holdings.
However fund managers Artemis Alpha Trust plc and Schroders Capital Global Innovation Trust have taken the decision to write down the value of their holdings, which sees the valuation of the entire company fall from £256m to £33.8m.
Artemis is writing down its holding by 75%, which it says is in addition to a write-down of 25% compared to the 30th April 2024 year-end valuation. The position, amounting to 2.3% of the company, is now held at £1.2m.
That follows Schroders’s decision to cut the value of its holding from £10.6m to £1.4m, amounting to a 87% reduction.
Reaction Engines is now seeking to raise further investment via an internally-led fundraise at a discount to the last valuation.
“Although the company has achieved significant progress in commercialising its innovative technology, recent revenue growth has been slower than anticipated,” stated Artemis.
Schroders echoed that and added: “The company will require further investment and time to become cash positive.”
Reaction Engines grew its commercial revenues by more than 400% last year and is reported to have a strong pipeline of contract and R&D opportunities, including military aircraft, hydrogen-powered commercial flight and heat pumps.