Introduction to Octopus Energy Group
Octopus Energy Group is close to selling a large stake in its software division Kraken Technologies at a price that will cement its status as one of Britain’s largest private companies. The company has put together a consortium of investors to buy between 10 and 20% of Kraken.
The Consortium and Valuation
Sources said an investment would likely value Kraken between $9 billion and $10 billion. D1 Capital Partners, a leading investor in technology companies, fund management giant Fidelity, and an arm of Canada’s Ontario Teachers Pension Plan are said to be involved in the deal. Octopus Energy hired Goldman Sachs to spin off Kraken and sell a stake to outside investors.
Expansion and Growth
The spin-off plan will expand Octopus Energy boss’s paper fortune and underline his success in building a globally significant British company over the last decade. Octopus Energy now has more than 7.5 million retail customers in the UK after rescuing collapsed energy supplier Bulb in 2022 and subsequently acquiring Shell’s home energy business. The company also has a further 2.5 million customers outside the UK.
Kraken Technologies
Kraken is an operating system licensed to other energy utilities, water utilities, and telecommunications providers. It connects all parts of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries. The company is also developing smart grids that allow people to use more renewable energy when it is in abundance.
Global Reach
In the UK, the platform is licensed to Octopus Energy’s competitors EON and EDF Energy, as well as water utility Severn Trent and broadband provider Cuckoo. Overseas, Kraken supplies Origin Energy in Australia, Japan’s Tokyo Gas, and Plentitude in countries such as France and Greece. Kraken, led by former BT Group chief executive Gavin Patterson, now has contracts with more than 70 million customer accounts worldwide.
Future Plans
A key benefit of separating Kraken from the rest of Octopus Energy Group would be that it would eliminate the perception of a conflict of interest among potential customers of the technology platform. Kraken has also diversified beyond the energy sector, joining a consortium earlier this year that is exploring a takeover bid for struggling Thames Water. The deal is expected to be announced soon, and a $10 billion valuation of Kraken would mean the entire group, including the retail business, would be worth about £15 billion.
