Octopus Energy to sell stake in software spin-off Kraken at $8.65bn valuation

Octopus Energy has agreed to sell a stake in its Kraken software arm, in a move that would value the division at $8.65bn (£6.4bn) and could open the way for a stock market flotation.The technology, which it already licenses to some rival suppliers, has been vital to the energy company’s success, making it easier to manage customer billing, smart meters, electric vehicle charging and home batteries to make using renewable power cheaper.Octopus said new investors, including the asset manager Fidelity International and the Ontario Teachers’ Pension Plan Board, had joined existing shareholders to acquire a $1bn stake in the business.The stake sale, which leaves Octopus with a 13.7% stake in Kraken, comes after Octopus announced in September that it was planning to spin out the division as a stand-alone company.The Octopus founder, Greg Jackson, said in a statement: “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.” Octopus is Britain’s largest household energy supplier, having taken the crown in January from British Gas, which held the position for nearly four decades after its privatisation under Margaret Thatcher.Founded by Jackson in 2015, Octopus grew out of a government push to open the market beyond the big six energy companies. In January, it became Britain’s largest household energy supplier, having taken the crown in January from British Gas, thanks in part to Kraken, which has allowed it to offer tariffs that take advantage of real-time electricity price fluctuations to lower bills.The company has licensed Kraken for use by other energy suppliers including E.ON, EDF and Good Energy in the UK. The software is also used in other countries by energy suppliers including Tokyo Gas in Japan and Origin Energy in Australia.Jackson told BBC Radio 4’s Today programme that a stock market listing could be on the horizon, and that the London Stock Exchange was a top contender for the UK-headquartered businesses initial public offering.“There’s every chance that the Kraken may, list at some point in the medium term. And, look, I think for large tech companies like Kraken, it’s going to be between London and the US. Personally, I really hope it’s London,” he said.“The one thing about Kraken is we’ve got this global investor base. It’s a global business. And so really the stock exchanges have got to kind of show why they are the right one for a business like this.”