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Rolls Royce-backed Reaction Engines fights for new funding | Business News
The Oxfordshire-based Boeing-backed company has hired Silverpeak to help find new funding following a slowdown in revenue growth and a round of job cuts, Sky News has learned.
By Mark Kleinman, City Editor @MarkKleinmanSky
Wednesday, 3 July 2024 19:16, United Kingdom
A British company aiming to pioneer hypersonic flight and counting Boeing Co and Rolls Royce Holdings among its backers is scrambling to raise new funding amid a cash flow crunch.
Sky News has learned that Oxfordshire-based Reaction Engines has appointed advisers to raise fresh capital.
Shareholders in the company, which also includes FTSE-100 arms maker BAE Systems, have been briefed on efforts to secure fresh cash in recent weeks.
Silverpeak, a consultancy firm, has been appointed to orchestrate the fundraising as the company is believed to need tens of millions of pounds more capital.
Reaction, founded in 1989, is chaired by Philip Dunne, a former defence minister.
Specializing in the development of advanced propulsion systems, the company is developing a new type of engine that aims to propel aircraft at Mach 25 in the Earth’s atmosphere.
In an update to investors, seen by Sky News, Mr Dunne said its financial performance last year was “not in line with our forecasts”.
Warning that Reaction Engines would also make a loss this year, he added: “While the company has a successful track record of raising capital, it is clear that market conditions are more difficult than when we last raised new funding in 2022.”
In January last year, the company announced that it had raised £40 million in additional capital, bringing the total amount raised from investors to approximately £150 million.
“As an emerging technology company, we have always sought to be prudent in managing our costs; however, we have taken additional steps to control costs and focus investment in areas that will support near-term revenue generation,” Dunne wrote.
“As a result, we were able to keep our 2023 loss broadly in line with our budget for the year.”
“It became evident during [the first quarter] that there was an ongoing mismatch between the feature we had added in anticipation of growth and the development of the sales pipeline.”
He added that the company’s workforce was cut earlier this year, with its leadership structure simplified.
Reaction Engines’ ability to attract interest and funding from some of the world’s largest aerospace companies underscores the enthusiasm it has generated among strategic and financial investors.
Its shareholders also include Schroders, Baillie Gifford Asset Management and the UAE Strategic Development Fund.
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Reaction Engines declined to comment on its search for new funding.