Octopus Energy Group is spinning out its technology arm Kraken as a standalone business following a $1bn investment round that values the software platform at $8.65bn, marking one of the largest UK tech demergers in recent years.
The funding round, led by D1 Capital Partners, includes backing from Ontario Teachers’ Pension Plan, Fidelity International and Durable Capital Partners. Existing shareholders in Octopus Energy Group are also participating.
Kraken was developed in-house at Octopus before being licensed to other energy suppliers. It has grown into a large-scale operating system for utilities, using artificial intelligence to manage customer billing, grid balancing and smart energy use. The platform is now contracted to serve more than 70m customer accounts worldwide and processes around 15bn data points each day.
The transaction will see Kraken become a formally independent company with its own governance, leadership and shareholder base. Octopus Energy will retain a minority stake of 13.7 per cent following the demerger, while also raising an additional $320m for its own operations and expansion.
Kraken’s contracted annual revenues passed $500m this year, according to the company, having quadrupled over the past three years. The separation is intended to allow the software business to scale more rapidly as a neutral technology provider to utilities globally, while enabling Octopus to focus on its consumer energy supply, generation and clean technology activities.
Greg Jackson, founder of Octopus Energy Group, said the move would give Kraken greater freedom to grow while strengthening Octopus’s balance sheet and investment capacity. He added that Octopus would now be able to compete more aggressively with incumbent energy suppliers as it continues to expand internationally.
Amir Orad, chief executive of Kraken Technologies, said independence would allow the business to deepen partnerships with utilities and accelerate its role in modernising energy systems worldwide. He said Octopus would remain a key customer and innovation partner.
Dan Sundheim, founder and chief investment officer at D1 Capital Partners, said Kraken’s growth and customer retention demonstrated the value it delivers to utilities seeking to modernise legacy systems.
The demerger comes amid growing investor interest in energy technology platforms that support the transition to low-carbon power, as utilities seek more flexible and data-driven operating models to cope with electrification, decentralised generation and volatile demand.
