Investors include D1 Capital Partners and Fidelity International
Octopus Energy has agreed to offload a minority holding in its Kraken Technologies arm through a transaction that places an 8.65 billion dollar (£6.4 billion) valuation on the software enterprise and sets the stage for a potential public listing.
Britain’s biggest gas and electricity provider has sold approximately 1 billion dollars (£740 million) worth of shares in Kraken to a group of backers, featuring global investment house D1 Capital Partners, Fidelity International and an arm of Ontario Teachers’ Pension Plan.
The funding injection will support both Octopus and Kraken operations, though it is believed the lion’s share of the capital will flow towards Octopus Energy.
The company revealed that an additional 320 million dollars (£237 million) would be pumped into Octopus by backers, spearheaded by Octopus Capital – amongst Octopus Energy’s most substantial investors – to bankroll “innovation and growth”.
Following the separation, Octopus will maintain a 13.7% interest in Kraken Technologies.
Octopus Energy Group founder Greg Jackson said: “Kraken is in a class of its own, in terms of technology, capability, and scale.”
He continued: “As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story.
“Having incubated Kraken, Octopus is a powerhouse of innovation and technology, and will now have even more horsepower to deliver the transformation of energy globally.”
Octopus revealed its intentions in September to separate Kraken Technologies into a standalone entity.
Kraken operates as an artificial intelligence (AI) driven platform utilised by energy retailers across the globe, linking over 70 million domestic and commercial energy accounts.
The split is designed to accelerate Kraken’s worldwide expansion, with speculation suggesting the company could pursue a public flotation on either the London or New York stock exchanges by September next year.
Amir Orad, chief executive of Kraken, said: “Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities, with Octopus Energy remaining a key innovation partner and forward-thinking global customer.
“With their backing, we can accelerate our impact on the energy transition, deepen partnerships with utilities worldwide, and help modernise the energy system at global scale – our goal being to positively impact a billion lives within a decade”.
Originally developed for Octopus’s internal operations, Kraken has subsequently secured numerous utility clients, including EDF, E.On Next, TalkTalk and National Grid US.
The separation occurs during Octopus Energy’s ongoing expansion, having surpassed British Gas to claim the position of Britain’s largest energy supplier earlier this year, catering to 7.7 million households.
However, the company acknowledged this year that it remains among three retail energy businesses yet to satisfy regulator Ofgem’s financial resilience requirements. Octopus announced on Tuesday that the investment round and additional cash infusion will “almost double Octopus Energy Group’s already strong balance sheet”.
