Proactive Investors - Rolls-Royce Holdings PLC (LSE:LON:RR.)-backed Reaction Engines had its book value slashed by two of the UK’s top fund managers, on predictions it will take more time and potentially more money to break even.
Dubbed the new Concorde due to the super-high-speed engines it is developing, Schroders (LON:SDR) cut the value of its 4.1% stake in Reaction by 87% with its latest filings showing it is now in the books at £1.4 million compared to £10.6 million in December.
Artemis, another fund manager, meanwhile has reduced the value of its 2.3% stake by around 75%, Sky News reported last night with confirmation from the Artemis Alpha Trust expected today.
At these valuations, Reaction, which has also the backing of BAE Systems (LON:BAES) and the government, would be worth around £34 million compared to £256 million in a recent funding round.
“Despite steps to commercialise its heat exchanger technology and recent contract awards, revenue growth at Reaction Engines has been slower than management anticipated, and the company will require further investment and time to become cash positive Schroders said in a statement.
Reaction is developing an engine that can travel at speeds of up to 19,000mph and fly from Britain to Australia in four hours.
Key to its development is a pioneering pre-cooling technology that prevents its engines from overheating.
“Reaction Engines has appointed advisers to raise additional funds from new and existing investors,” Schroders statement added, which reportedly will involve Rolls-Royce.
Rolls-Royce has said it was among the companies involved in the fundraising talks.
BAE has tested the technology on naval ships to recover waste heat and to cool exhausts.
Schroders inherited its stake after it took over the running of the collapsed Woodford Patient Capital Trust, which was one of Reaction Engines original investors.