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Octopus Energy is planning to demerge its technology arm Kraken Technologies, creating a standalone entity that could be valued at up to $10bn.
The UK-based energy supplier is set to separate from the business following rapid growth over the past few years, according to people familiar with the matter.
Octopus Energy was founded in 2015, in part to prove the Kraken technology, and is now the UK’s largest household energy supplier, overtaking Centrica’s British Gas this year.
Investment banks have been invited to pitch for the demerger which would happen within the next 12 months, according to Sky News which first reported the plans.
The new entity would be owned by current Octopus Energy shareholders while new investors may also be sought for a minority stake. Octopus Energy may retain a small stake, according to people familiar with the matter. Kraken could be valued at up to $10bn, they added.
The technology platform is designed to make customer billing more efficient as well as develop new tariffs and optimise the use of electric cars, solar panels and other technology.
Octopus, led by chief executive Greg Jackson, uses the technology itself and also licences it to other energy and water companies around the world, including rivals such as Eon and EDF.
Bosses want the company to be serving 100mn accounts by 2027. In May it announced it was contracted to serve more than 70mn accounts, after signing up National Grid’s US business as the first large US utility to adopt the platform.
The technology has been key to Octopus Energy’s appeal to investors, helping propel it to a valuation of $9bn in May 2024 when major shareholders such as Generation Investment Management and Canada Pension Plan Investment Board increased their stakes. Galvanize Climate Solutions and Lightrock came in a month later at the same valuation.
Veery Maxwell, co-head of innovation and expansion at Galvanize, told the Financial Times in January: “Octopus has managed to position itself as a high-trust brand and disrupter — but of sufficient scale that customers aren’t taking start-up risk. Kraken is the software platform that underpins that offering.”
Octopus Energy has steadily been making Kraken more independent, in part to try and fend off any concerns among Kraken customers about potential conflicts of interest.
That has included appointing a Kraken chief executive, Amir Orad, and chair, Gavin Patterson, the former BT chief executive. Demerging the business would be a step further, people familiar with the matter said.
It is also likely to fuel speculation about a possible listing for Kraken. In January, Jackson said he was “open-minded” about the company’s future.
Octopus declined to comment.