Octopus Energy is preparing to spin off its Kraken Technologies division as a standalone company after selling a $1 billion stake in the AI-based platform, a transaction that values the business at $8.65 billion (£6.4 billion).
Investor Deal Sets Path For Demerger
Octopus, Britain’s largest gas and electricity supplier, said the stake was sold to a group of investors led by New York-based D1 Capital Partners. The deal clears the way for Kraken to be demerged from Octopus Energy Group and raises the prospect of a future stock market listing.
Greg Jackson, founder and chief executive of Octopus Energy, told the BBC there was “every chance” Kraken would pursue a public listing in the medium term, with the choice of venue likely to be between London and the United States.
Most of the $1 billion raised will be directed to Octopus Energy to support expansion, while the remainder will go to Kraken. Jackson said Kraken is expected to operate fully independently from Octopus within a few months.
What Kraken Does And How It Has Grown
Kraken uses artificial intelligence to automate billing and customer service for energy providers. The platform can also manage energy consumption by shifting usage away from peak periods and rewarding customers for reducing demand at those times.
Originally developed for Octopus’s own use, Kraken has since secured contracts with other utilities, including EDF, E.On Next, TalkTalk, and National Grid US. The platform now serves around 70 million household and business accounts worldwide.
Kraken chief executive Amir Orad said the spinoff would give the business greater focus and flexibility. He said operating within Octopus had previously made it harder to work with competing energy suppliers.
Ownership Structure And Listing Considerations
Alongside D1 Capital Partners, other investors in Kraken include Fidelity International and a unit of the Ontario Teachers’ Pension Plan. Octopus Energy will retain a 13.7% stake in Kraken following the transaction.
Jackson said Kraken’s global investor base means any future share listing would need strong support from the chosen exchange. He added that while London is a possible venue, the decision would depend on where Kraken can attract the most investor backing.
A London flotation would run counter to a recent pattern of UK-based firms choosing to list in the United States instead.
Octopus Energy’s Broader Financial Position
Jackson said Octopus Energy has created around 12,000 jobs in the UK, including 1,500 roles linked to Kraken, and confirmed the group’s headquarters will remain in the UK.
The spinoff comes as Octopus continues to expand its core energy supply business. Earlier this year, it overtook British Gas to become the UK’s largest energy retailer, serving 7.7 million households.
However, Octopus confirmed this year that it is one of three retail energy firms yet to meet the financial resilience targets set by regulator Ofgem. The company said the new investment would almost double the group’s balance sheet strength.
Losses Despite Rising Sales
The deal was announced alongside Octopus Energy’s results for the year to April. The group reported a pre-tax loss of £260 million, compared with a £78 million profit the previous year, despite sales increasing by 10% to £13.7 billion.
Octopus said profits were hit by lower energy demand due to warmer weather and the end of energy crisis support payments in 2024. It attributed around £103 million of the impact to unusually warm conditions, citing the UK’s hottest spring on record since 1885. Gas usage fell by 11% in March and by 25% in April, the company said.
Featured image credits: Wikimedia Commons
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