UK's Octopus Energy to spinoff AI unit Kraken at $8.65 billion valuation

Octopus Energy, a prominent player in the UK’s renewable energy sector, is preparing to spin off its artificial intelligence division, Kraken Technologies. This strategic move lays the groundwork for a potential public offering, aiming for a separation by mid-2026. In a recent announcement, Origin Energy, which holds a significant stake in Octopus, revealed that the company secured $1 billion in its inaugural standalone funding round, thereby valuing Kraken at an impressive $8.65 billion. This funding is pivotal for the upcoming spin-off, which is expected to enhance Kraken's operational capabilities. Frank Calabria, CEO of Origin, highlighted that a notable unnamed customer, along with D1 Capital Partners, contributed to this investment round. Origin itself is set to inject $140 million into the venture. Calabria noted, "With the signing of this major new customer, Kraken is rapidly progressing towards its target of 100 million customer accounts, well ahead of schedule." Post-spin-off, Octopus Energy plans to retain a 13.7% stake in Kraken, while Origin will maintain a 22.7% interest. Calabria expressed confidence in the transactions, stating they position both Octopus and Kraken for substantial growth, supported by a robust capital structure. Kraken Technologies specializes in energy software solutions for utility companies, including industry giants like EDF and E.ON. Origin reported that Kraken’s annual recurring revenue has more than doubled over the past 18 months. Earlier this year, Kraken’s CEO Amir Orad emphasized the company’s strong backing from investors focused on energy and utilities during an interview with CNBC. As Kraken transitions into a standalone entity, Orad acknowledged the potential for a public listing, underscoring the need to concentrate on becoming a dedicated software firm. He noted, "We anticipate that our investor base will evolve to attract more long-term, software-centric investors as we move forward with this separation."