In a significant setback for British aerospace innovation, Reaction Engines, the company developing a revolutionary space vehicle engine, has seen major investors drastically reduce the value of their stakes. Artemis, a prominent London-based fund manager, has slashed the value of its 2.3 per cent holding by 75 per cent, following a previous 25 per cent reduction in July. The Artemis Alpha Trust now values its stake at a mere £1.2 million, down from £6.4 million in April.
Schroders Capital Global Innovation Trust has also markedly lowered its investment value, from £10.6 million at the end of last year to just £1.4 million as of June’s end. These revaluations suggest Reaction Engines’ overall worth has plummeted to approximately £34 million.
The company, founded in 1989 and chaired by former Conservative defence minister Philip Dunne, has been developing the Sabre engine—a hybrid jet and rocket propulsion system designed for hypersonic space vehicles. Despite its ambitious goals and backing from industry giants like BAE Systems and Rolls-Royce Holdings, Reaction Engines has struggled to meet revenue expectations.
Investors cite slower-than-anticipated revenue growth and commercialisation challenges as primary reasons for the writedowns. The Artemis Alpha Trust disclosed that Reaction Engines is currently pursuing an internal fundraising effort, likely at a discount to its previous valuation.
This financial turbulence comes despite the company’s reported technological progress and recent contract awards. Reaction Engines’ innovative pre-cooling technology, crucial for preventing engine overheating at extreme speeds, has garnered attention in the aerospace sector.
The situation highlights the precarious nature of investing in cutting-edge aerospace technologies. While the potential rewards are substantial, the path to commercial viability can be fraught with setbacks and financial uncertainties. As Reaction Engines grapples with these challenges, the coming months will be critical in determining whether the company can secure the funding and contracts necessary to realise its vision of revolutionising space travel and hypersonic flight.
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