I&C, which contributed revenues of €94mln last year to the group’s power systems division, has been sold to France’s Framatome.
Rolls said its UK civil nuclear business, or small modular reactor activities, are not being sold.
“This transaction marks a further simplification of our business and contributes towards our target to generate over £2bn from disposals,” Rolls-Royce chief executive Warren East said in the statement.
The engine maker is still looking to bolster its finances after its civil aircraft aftermarket business was flattened by the lack of travel due to the coronavirus pandemic.
In the past couple of months, the FTSE 100 group has drummed up £4bn via a discounted rights issue and an issue of bonds.
Rolls, which expects the I&C deal to be completed “at the beginning of the second half 2021”, has also put Spanish business ITP Aero on the block, plus other smaller units.