Rolls-Royce is preparing to raise funds by selling a stake in its small modular reactor (SMR) business, according to a report by The Sunday Telegraph. CEO Tufan Erginbilgic said the firm was in discussion with possible investors.
Around £280m ($358m) has been put into the venture by the current backers including Rolls, BNF Resources, Constellation and the Qatar Investment Authority. In addition, the company has received £210m in grant funding from the UK government. However, funds are due to run out by early next year, requiring Rolls-Royce and its backers to either put in more money, sell equity to outside investors or possibly do a combination of both.
One source familiar with the discussions told The Telegraph that Rolls-Royce SMR would look to raise hundreds of millions of pounds, probably based on a valuation of at least $2bn (£1.6bn), which is the current market value of US rival NuScale.
The company is being advised by bankers at BNP Paribas and is understood to have received approaches from “across the board” including infrastructure investors, clean energy funds, hedge funds and other nuclear power companies.
In July, the Nuclear Industry Association (NIA) applied to the UK government for a justification decision for Rolls-Royce SMR’s reactor design – a regulatory process which requires a government decision before any new class or type of practice involving ionising radiation can be introduced in the UK. The UK Government confirmed that the application has been accepted for consideration.
The Rolls-Royce SMR design is a three loop PWR with an output of 470 MWe derived from 1,358 MWt based on modularisation of reliable and proven technology. It is one of six SMR designs shortlisted in October 2023 by Great British Nuclear for the UK’s SMR selection competition. A final investment decision in two or three of the designs is expected to be taken in 2029. The Rolls-Royce SMR also recently completed Step 2 of the Generic Design Assessment (GDA) by UK nuclear industry regulators – the Office for Nuclear Regulation, the Environment Agency and Natural Resources Wales. The GDA process assesses new nuclear power plant designs for deployment in the UK. The design will now proceed to Step 3 of the GDA – detailed assessment.
Asked about the funding situation, Erginbilgic told The Sunday Telegraph he was “very comfortable”. He added: “I won’t go into specific deals. But obviously our SMR is an attractive proposition and it’s got a great future and some investors potentially recognise that.”
A spokesman for Rolls-Royce SMR added: “Our first mover advantage, combined with the significant growth in demand for small modular reactors, puts Rolls-Royce SMR in a leading position to capitalise on this global decarbonisation opportunity. Naturally, this is attracting investor interest and we continue to consider a range of options to support our future growth.”
