Octopus Energy agreed Tuesday to sell a stake in its software arm Kraken at an $8.65 billion valuation, bringing in $1 billion from new investors as the British energy supplier positions the unit for faster growth and a potential public listing.
Octopus said the transaction values Kraken, its technology platform that powers billing, smart meters, and electric vehicle charging, at £6.4 billion. New investors include Fidelity International and the Ontario Teachers’ Pension Plan Board, joining existing shareholders.
The deal leaves Octopus with a 13.7% stake in Kraken after the company announced plans in September to spin off the unit as a standalone business. Octopus is Britain’s largest household energy supplier, overtaking British Gas in January.
Kraken has been central to Octopus’ growth, enabling tariffs that reflect real-time power prices and help customers use renewable electricity more cheaply. The platform is also licensed to rival suppliers in the U.K. and overseas.
Investors Back Kraken as Standalone Technology Business
Greg Jackson, Octopus Energy’s founder and chief executive, said the investment underscores Kraken’s position in the energy technology market.
“Kraken is in a class of its own in terms of technology, capability, and scale,” Jackson said in a statement. “As an independent company with world-class backers, it will be free to grow even faster.”
Fidelity International and Ontario Teachers did not disclose individual stake sizes but were part of the $1 billion investment, Octopus said. The valuation places Kraken among the most valuable privately held U.K. technology firms.
Octopus was founded in 2015 amid a government effort to open the energy market beyond the so-called big six suppliers. Kraken’s software has allowed the company to manage complex systems such as smart meters, home batteries,s and electric vehicle charging.
The platform is used by energy companies including E.ON, ED, F, and Good Energy in the U.K., as well as Tokyo Gas in Japan and Origin Energy in Australia. Octopus said Kraken operates in multiple countries and serves millions of customer accounts.
CEO Signals IPO Could Be Next Step
Jackson said a stock market listing for Kraken could come in the medium term, with London among the leading options.
“There’s every chance that Kraken may list at some point,” Jackson told BBC Radio 4’s “Today” program. “For large tech companies, Kraken, it’s going to be between London and the U.S., and I really hope it’s London.”
He said Kraken’s global investor base means exchanges must demonstrate why they are the right fit. Jackson is an adviser to the U.K. government after joining the Cabinet Office board in August, though ministers earlier this year rejected his proposal to split the national energy market into regional pricing zones.
Jackson will retain a 4.7% stake in Octopus and an undisclosed holding in Kraken. He said he plans to increase his Octopus stake while reducing his share in the software business.
Deal Bolsters Balance Sheet Despite Annual Loss
Octopus Energy said the cash infusion strengthens its balance sheet and could support further acquisitions. The company has bought about 40 businesses over the past decade.
“Octopus has got a £1.5 billion balance sheet even before the Kraken deal,” Jackson said. “The Kraken deal doubles that. Octopus sits here with a great war chest.”
The company also reported Tuesday that it swung to a pretax loss of £260 million for the year ended April, compared with a £77.6 million profit a year earlier. Revenue rose 10% to £13.7 billion.
Octopus Energy attributed the loss to an “exceptionally warm spring” that reduced energy demand and to higher costs from investments in staff, brand, and operations. The company added nearly 4,000 employees during the year and now employs about 10,000 people.
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