Octopus Energy to Spin Off Kraken Technologies Following $1 Billion Investment
Octopus Energy plans to spin off its technology division, Kraken Technologies, after selling a $1 billion stake in the company. The deal values Kraken at $8.65 billion, with the investment led by D1 Capital Partners. Octopus Energy will retain a 13.7% stake in Kraken following the transaction.
Most of the proceeds from the investment will go directly to Octopus Energy to fund its expansion efforts, while Kraken will receive the remainder of the funds and will begin operating independently within a few months. This demerger also opens the possibility for Kraken to pursue a future public flotation on the London or US stock markets.
Kraken Technologies leverages artificial intelligence to automate customer service and billing, manage energy usage timing for customers, and incentivize reductions during peak demand periods. Originally developed to support Octopus Energy, Kraken now services clients such as EDF, E.On Next, TalkTalk, and National Grid US, managing around 70 million accounts worldwide.
The investor group includes notable firms such as Fidelity International and a unit of the Ontario Teachers’ Pension Plan, with D1 Capital Partners taking the lead. Kraken's CEO, Amir Orad, said the spin-off will provide the company with the necessary focus and freedom to grow independently, especially as it had previously encountered challenges collaborating with Octopus Energy's rivals.
Octopus Energy itself remains focused on growth, having overtaken British Gas earlier this year to become the largest energy supplier in the UK, serving approximately 7.7 million households. However, the company has not yet met the financial resilience targets set by Ofgem.
The group has created 12,000 jobs in the UK, including about 1,500 positions at Kraken. Kraken's headquarters will remain in the UK, and a listing on the London Stock Exchange would be preferred if investor support and market conditions permit.
Octopus Energy is scheduled to publish its annual results on Tuesday. The recent $1 billion cash injection is described as nearly doubling Octopus Energy Group's balance sheet.
