Kraken Unleashed: How Octopus Energy's Tech Divestment Will Transform the Energy Landscape

Octopus Energy, the leading energy supplier in Britain, is taking a bold step by spinning off its Kraken Technologies arm into a standalone entity valued at a staggering $8.65 billion (£6.4 billion). This strategic move comes after Octopus sold a $1 billion stake in Kraken to a consortium led by D1 Capital Partners from New York. The transition will allow Kraken to operate independently and potentially pursue a stock market flotation soon, with the locations under consideration being either London or the US.

Kraken is on the forefront of technology with its AI-driven platform that automates customer service and billing processes for energy companies, rewarding customers for energy efficiency during peak usage times. Initially developed exclusively for Octopus, Kraken has expanded its client base, now serving 70 million accounts globally, including major clients like EDF, E.On Next, and National Grid US.

The majority of the funds from the investment will support Octopus’s growth strategy while Kraken will receive the remaining portion to aid its autonomy. Kraken CEO Amir Orad expressed enthusiasm about the spinoff, emphasizing the newfound flexibility it will have to develop its services and work with competitors.

Founder and CEO Greg Jackson highlighted that Octopus has generated 12,000 jobs in the UK, with 1,500 directly linked to Kraken. As Kraken advances, there’s potential for a London listing that could challenge the trend of UK firms opting for US markets. Despite Octopus’s impressive growth—overtaking British Gas to become the largest energy supplier—2023 has seen challenges such as a £260 million loss amidst drastic shifts in energy demand and profitability due to unseasonably warm weather. However, the injection of capital is set to substantially strengthen Octopus’s balance sheet, positioning both entities for a vigorous future in the energy sector.