Rolls-Royce reportedly exploring funding avenues, including an IPO, for its small nuclear reactor division.

Rolls-Royce's Potential IPO for Small Nuclear Business

• Financing Discussions: Rolls-Royce is exploring financing options for its small nuclear business, including a potential IPO, as reported by The Financial Times. The discussions involve investment houses and banks, focusing on future funding needs.
• Shareholder Debate: There is an ongoing debate among shareholders regarding the financing strategy, indicating varied opinions on the best path forward.

Government Contract and Business Prospects

• SMR Project Selection: The U.K. Labour government has chosen Rolls-Royce to build the country's first small modular reactors (SMR), with the company currently negotiating a contract expected to be finalized later this year.
• Consortium Composition: The SMR consortium is primarily owned by Rolls-Royce and includes the Qatar Investment Authority, BNF Resources, and CEZ Group, which holds a 20% stake.

Future Financial Outlook

• Profitability Timeline: Rolls-Royce's SMR business, which employs around 800 people, is projected to become free cash flow positive and profitable by 2030.
• IPO Decision Timeline: The company has stated it is not currently planning an IPO and will wait to finalize the government contract before making any decisions, as the contract's commercial terms could significantly influence the business's valuation.