Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Three nuclear energy developers are seeking to raise more than $500mn through mergers with special purpose acquisition companies as investors rush to tap into an atomic energy boom.
Terra Innovatum, Terrestrial Energy and Eagle Energy Metals said the transactions, which they expected to be completed by the end of the year, would accelerate the development of small modular reactors.
Several other companies developing nuclear technologies are considering listings via initial public offerings, including Holtec International and Quantum Leap Energy, a division of ASP Isotopes.
“Investors now realise that nuclear energy is here to stay because it is needed to power the artificial intelligence revolution and this is turbocharging interest, particularly in the US,” said Nick Lawson, the chief executive of Ocean Wall, an investment group advising ASP Isotopes on the QLE spin off.
Shares in nuclear energy companies surged near record highs last week as optimism about a nuclear renaissance gathered pace owing to AI power demand and political support from the Trump administration.
Last month Westinghouse outlined plans to build 10 large nuclear reactors in the US at a meeting in Pittsburgh attended by President Donald Trump, who has set a target of quadrupling American nuclear power capacity in the next 25 years.
“2025 for nuclear technology is what 1995 was for the tech sector,” said Simon Irish, Terrestrial Energy’s chief executive, referring to the start of a 30-year tech growth cycle sparked by Microsoft and Netscape’s promotion of the internet.
“Many investors have now converged on the unavoidable conclusion about energy choice: we can’t meet surging power demand in an environmentally responsible way without nuclear,” he said. “I’m having conversations with investors now that I wouldn’t have been able to engage three years ago.”
Terrestrial is aiming to raise $280mn through a combination with HCM II Acquisition Corp — whose chief executive Shawn Matthews is the former CEO of Cantor Fitzgerald — to fund development of a nuclear reactor that uses molten salt rather than water as a coolant.
It is one of dozens of companies developing SMRs that typically generate about a third or less of the power of standard reactors.
Terra Innovatum, which is seeking to raise $230mn, and Eagle Energy Metals are both developing SMRs. Eagle, which also has uranium mining assets, said it had secured a commitment of $30mn from an institutional investor.
But experts caution the nuclear sector is prone to boom and bust cycles and cost overruns, which increase risk. Nuclear fuel supplier Centrus filed for Chapter 11 bankruptcy protection in 2014 following the Fukushima accident in Japan in 2011. Westinghouse sought protection in 2017 due to cost overruns at Vogtle in Georgia, the last nuclear plant constructed in the US.
In 2023 X-energy was forced to pull a $1.8bn Spac deal because of “challenging market conditions”.
Spacs have made a comeback in the US this year after a boom in 2021, when billions of dollars flowed into the vehicles to fund commercial space ventures, flying taxi firms and other speculative ventures. The frenzy quickly fizzled out because of a market downturn triggered by rising interest rates.
The median price performance of the 29 private companies that have gone public by merging with Spacs this year is a fall of 67 per cent, according to data provider ListingTrack. The vast majority of those companies also suffered steep declines four years ago.
Some financiers argue that investors considering nuclear Spac deals should exercise caution.
“[Most nuclear companies’] primary assets are a ticker symbol and a set of glossy renderings. If it sounds similar to the electric vehicle Spacs of barely four years ago, it’s because it is,” said one executive at a medium-sized US hedge fund, referring to a series of EV deals that went on to lose investors millions of dollars.
Despite the risks, investor enthusiasm for nuclear has roared back following a series of power deals struck between developers and technology giants Google, Amazon and Microsoft to supply internet data centres.
But investors have been frustrated by the limited number of listed public companies, according to analysts.
“There is a lot of investor enthusiasm around nuclear, but only a few public companies to choose from and evaluate — having more options would be a welcome development,” said Marc Bianchi, an analyst at TD Cowen.
