Octopus Energy is set to spin out its software division Kraken at an $8.65bn valuation.
The UK energy company announced on Monday it has reached a deal to sell $1bn-worth of shares in Kraken. It is the first standalone investment into its software arm and paves the way for a formal demerger in mid-2026.
Of the $1bn raised, $150m will go to Kraken while $850m will go to Octopus.
The round is led by US investor D1 Capital Partners, with participation from Ontario Teachers’ Pension Plan, Fidelity International and Durable Capital Partners.
Existing investors in Octopus have also participated in the fundraise and are keeping a stake in Kraken. Australian energy company Origin Energy, which holds a 22.7% stake in Octopus, said in a statement it is investing $140m as part of the process, and will hold a 22.7% stake in Kraken. Octopus will have a 13.7% stake in Kraken.
The company also announced that investors led by Octopus Capital — one of Octopus’s largest investors — are injecting another $320m into Octopus for “innovation and growth”.
Demerging Kraken
Founded in 2015, Octopus Energy delivers gas and electricity to customers. It also developed Kraken, a software platform that it sells to other utilities companies to help them bill customers, as well as manage energy assets like solar panels, heat pumps and EV chargers.
Kraken customers include EDF, E.ON Next, National Grid US, Origin Energy, Plenitude and Tokyo Gas.
Over the past year Octopus founder Greg Jackson has often sought to raise the profile of the tech arm in interviews, describing the rest of the business as “a demo client” for the real star: Kraken.
In September, Octopus confirmed that it was planning to spin off Kraken.
In a statement released on Monday Jackson said: “Kraken is in a class of its own, in terms of technology, capability, and scale. As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story.”
Following the demerger Kraken will have a separate cap table, independent governance and leadership.
Amir Orad, CEO of Kraken, said: “Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities, with Octopus Energy remaining a key innovation partner and forward-thinking global customer.”
The move paves the way for a potential public listing for Kraken within the next year or two, according to the Financial Times, which could take place in London or New York.
What does this mean for Octopus Energy?
Octopus recently recorded £159m in post-tax profit according to full-year results published in April 2024, a 12% dip compared to the previous year. In the same period, Kraken saw profits surge 483% to £35m.
Observers say Kraken’s strong growth trajectory is the reason Octopus has managed to convince investors to back a utility company. Over time, the company has raised over $2bn from investors including Lightrock, Al Gore’s Generation Investment Management and Galvanize Climate Solutions. It last reported a $9bn valuation in 2024.
The latest move gives Kraken an $8.65bn post-money valuation. It is unclear how the split will affect Octopus’s valuation. The company did not immediately respond to a request for comment.
“Kraken is the reason for the valuation,” one climate-focused investor previously told Sifted, who is not invested in Octopus and spoke on the condition of anonymity. Investors are likely to have put funds into the company because of Kraken, the person added.
