(Bloomberg) -- Reaction Engines Ltd., a UK company behind a rocket engine designed for hypersonic flight, has had its valuation slashed by more than £200 million ($264 million) by two investors as it searches for funds.
Artemis Fund Managers has written down the value of its stake in the Oxfordshire-based company by 75%, it said Friday, a day after Schroders Plc announced it had slashed its valuation of the firm by 90%.
The writedowns come as Reaction hunts for more funds, having already raised £150 million from investors such as BAE Systems Plc. The company had been examining ways to cut costs to delay asking shareholders, which also include Rolls-Royce Holdings Plc and US hedge fund Elliott Investment Management LP, for further cash.
Artemis Alpha Trust, the fund that holds Artemis’ stake, had already written down the value of its Reaction holding by 25% earlier this year. It has a stake of around 2.1%, according to UK filings, which means its valuation has been cut from about £300 million to £75 million — a drop of £225 million.
“Although the company has achieved significant progress in commercializing its innovative technology, recent revenue growth has been slower than anticipated,” Artemis said. “The company is currently pursuing an internally-led fundraise which is likely to be at a discount to the last valuation.”
On Thursday, Schroders Capital Global Innovation Trust, which manages Schroders’ holding, had also pointed to slower-than-expected revenue growth at Reaction. It has a 4.1% stake based on UK registry filings, implying that it has slashed its valuation of the company from around £256 million to £34 million.
Reaction, which was founded in 1989, is developing a new type of engine to power aircraft at five times the speed of sound in the atmosphere and Mach 25 for space access. The powerplant breathes air to cool parts so that they don’t melt at such high speeds.
In January 2023, Reaction completed a £40 million funding round led by the United Arab Emirates.
In its latest accounts, covering 2022, Reaction lost £28.7 million on a pretax basis, more than the £20.3 million it lost a year earlier. It generated revenue of £4.7 million in 2022, less than the £7.2 million from 2021.
Reaction declined to comment on the writedowns or progress on funding talks.
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