Octopus Energy to spin out Kraken in $8.65bn valuation deal

Octopus Energy Group is preparing to spin out its technology arm Kraken in a landmark deal that values the business at $8.65 billion, following a $1 billion standalone investment round.

The funding, announced in London on 29 December, is led by D1 Capital Partners, with participation from major global investors including Fidelity International, Durable Capital Partners and the Ontario Teachers’ Pension Plan Board through its Teachers’ Venture Growth arm.

The move paves the way for Kraken’s formal demerger and independence from Octopus Energy Group, allowing the platform to operate as a neutral, global technology provider to utilities while Octopus sharpens its focus on energy retail, generation and clean technology.

As part of the transaction, new and existing investors are acquiring around $1bn of Kraken equity. In parallel, investors led by Octopus Capital are injecting a further $320m into Octopus Energy Group to support innovation and growth across its wider businesses. After the split, Octopus will retain a 13.7% stake in Kraken.

Originally incubated within Octopus, Kraken has grown into one of the world’s most advanced AI-powered operating systems for energy utilities. It is now contracted to serve more than 70 million customer accounts globally through licensing agreements with major energy providers and processes over 15 billion new data points every day.

In September, Kraken revealed that its contracted annual revenues had exceeded $500m, representing fourfold growth in just three years. The company’s technology is increasingly seen as critical infrastructure for utilities modernising billing, customer service and grid management in support of the energy transition.

Greg Jackson, founder of Octopus Energy Group, said the demerger marked a natural next step. “Kraken is in a class of its own in terms of technology, capability and scale,” he said. “As an independent company with world-class backers, it will be free to grow even faster and is set to be a true UK-founded success story.”

Jackson added that Octopus itself would benefit from the move, pointing to its more than 10,000 staff, 11 million customers, $10bn of generation assets under management and expansion into areas such as EV leasing and heat pump manufacturing.

Kraken’s chief executive, Amir Orad, said independence would allow the platform to accelerate global adoption. “Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities,” he said. “Our goal is to positively impact a billion lives within a decade.”

Dan Sundheim, founder and chief investment officer of D1 Capital Partners, said Kraken’s growth and customer retention underpinned the firm’s investment decision. “We believe Kraken is adding significant value to utilities, as reflected in its customer satisfaction, stickiness and growth,” he said.

Following the demerger, Kraken will operate with its own governance structure, leadership team and cap table, marking one of the most significant UK tech spin-outs in recent years and underlining the growing global demand for data-driven energy infrastructure.

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Octopus Energy to spin out Kraken in $8.65bn valuation deal