X-energy joins forces with Ares to go public

The business combination ascribes a pre-money equity value of approximately USD2.0 billion to X-energy, the companies said. The transaction, which has been unanimously approved by the boards of directors of both companies and by members of X-Energy, is expected to be completed in the second quarter of 2023 subject to closing conditions including the approval of AAC shareholders and the receipt of governmental and regulatory approvals. The combined company will be named X-Energy, Inc, and will be listed on the New York Stock Exchange (NYSE).

X-energy is the developer of the Xe-100 high temperature gas-cooled small modular reactor (SMR) as well as TRISO - short for tri-structural isotropic - advanced nuclear fuel. AAC is a publicly traded special purpose acquisition company affiliated with global alternative investment manager Ares Management Corporation.

"In our view, advanced nuclear is not only a key component of the energy transition, but it is also vital to assuring our nation's energy security," AAC CEO David Kaplan said. "Second, we believe there is significant opportunity here for an early mover such as X-energy - with its own proprietary technology - to become a leader in the addressable clean energy generation market."

The USA, Canada and the UK alone represent a total addressable market of some 471 GWe of additional energy capacity by 2040, with about 15% of this being "prime opportunities for advanced nuclear technology", he told investors. "We believe X-energy is well-positioned for long-term success due to its unique ability to address the needs of both power for the electric grid as well as to generate heat for industrial applications. As a result, X-energy has a prospective customer pipeline of approximately 30 potential unique customers, including Dow Inc and Ontario Power Generation Inc, for both power generation and industrial use applications. We believe the identified end-markets represent a potential USD500 billon revenue opportunity for plants constructed by 2040, growing to an approximately USD1 trillion dollar revenue opportunity for plants constructed by 2050."

X-energy is set to receive some USD1.2 billion in federal funding under the US Department of Energy's (DOE) Advanced Reactor Demonstration Program to develop, build, and demonstrate operational advanced reactors by the end of the decade.

"Given the capabilities of nuclear technology, we see a significant global addressable market opportunity," X-energy CEO Clay Sell said. "We wanted to partner with Ares because of its investment expertise, industry and investor relationships, and access to capital across its global platform that we believe can enhance our business. We are thrilled to partner with Ares on this transaction."

X-energy is not the first SMR developer to undergo such a business combination to accelerate  the commercialisation of its technology. That accolade goes to NuScale Power, which earlier this year merged with Spring Valley Acquisition Corp to create the world's first publicly traded SMR technology provider. The combined company, operating as NuScale Power Corporation, has been trading on the NYSE since May.