Rolls-Royce is exploring a stake sale of its small modular reactor (SMR) business to raise funding, with reports citing talks from potential investors.
Rolls-Royce (LSE:RR) shares closed Monday’s trade on the back foot, losing 6% in volatile markets, though investors also eyed reports that the British engineer may be working on a stake-sale for its small modular reactor (SMR) business.
Such a deal would unlock new funding for the business which has great promise for significant growth, but also requires continuing capital investment.
Talks are taking place with potential investors, including infrastructure investors, clean energy funds, hedge funds, and other nuclear power companies – that’s according to a report by The Sunday Telegraph over the weekend.
It comes as the unit’s current funds are believed to stand at around £280 million, along with government grants of £210 million that are due to run out early next year.
Rolls-Royce aims to be the first to deploy SMR technology in Britain, and it’s a frontrunner in the government’s SMR design competition, managed by Great British Nuclear.
The SMRs, designed by Rolls-Royce, could halve the cost of nuclear power plants and reduce construction time.
Initial units are expected to cost between £2 billion and £3 billion, generating up to 470 megawatts of electricity. Rolls-Royce expects to improve cost efficiencies over time.
The company’s success with SMRs would expect, in turn, to see the UK positioned as a leader in SMR technology and secure a substantial portion of the supply chain domestically.
In London, Rolls-Royce shares were priced at 435.5p marking a 6% decline for the day.
