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Octopus Energy plans to separate its Kraken Technologies division into an independent company following a transaction that valued the AI-driven platform at $8.65 billion (£6.4 billion). As the United Kingdom’s largest supplier of gas and electricity, Octopus sold a $1 billion stake in Kraken to a consortium of investors, led by New York-based D1 Capital Partners. This investment facilitates Kraken’s upcoming spin-off and opens the possibility of a future public offering.
Kraken Technologies specializes in using artificial intelligence to streamline customer service and billing for energy providers. Its technology can monitor and encourage customers to reduce energy consumption during peak periods. Originally developed for Octopus’s internal use, Kraken has expanded its client base to include major utilities such as EDF, E.On Next, TalkTalk, and National Grid US. The platform currently serves approximately 70 million household and business accounts worldwide. The majority of the capital raised from this $1 billion investment will bolster Octopus’s growth plans, with a smaller portion allocated to Kraken. Octopus will retain a 13.7% ownership in Kraken, which will operate completely independently within a few months, according to Greg Jackson, Octopus’s founder and CEO.
Kraken CEO Amir Orad expressed that the spinoff will allow the company to gain the “focus and freedom” to expand more aggressively, noting previous challenges in collaborating with Octopus’s competitors. Jackson commented on potential locations for Kraken’s stock market listing, emphasizing London or the US as leading options. He highlighted Kraken’s global investor base and stated, “the stock exchanges have got to kind of show why they are the right one for business.” Choosing London would mark a reversal of recent trends where technology firms have favored US stock exchanges.
Octopus Energy itself has experienced significant growth, surpassing British Gas earlier this year to become the UK’s largest energy supplier with 7.7 million households served. However, the company acknowledged it remains one of three retail energy firms that have yet to meet Ofgem’s financial resilience requirements. Following the investment, Octopus reported its financial results for the year ending April, showing a £260 million pre-tax loss compared to a £78 million profit the previous year. This loss occurred despite a 10% increase in sales to £13.7 billion, affected largely by decreased energy demand due to an unusually warm spring and the end of government energy crisis payments. Octopus attributed around £103 million of the profit impact to the UK experiencing its hottest spring on record since 1885, with gas usage dropping sharply in March and April
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