Octopus Energy spins off AI unit Kraken at $8.65 billion, eyes public listing by mid-2026

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

British renewable energy startup Octopus Energy is set to spin out its AI tech unit Kraken Technologies, setting the stage for a potential public listing. Origin Energy, which holds a major stake in Octopus, said in a statement late on Monday that Octopus had raised $1 billion in its first standalone funding round, valuing the business at $8.65 billion. The funding round paves the way for the spinoff, with Octopus targeting a separation by mid-2026, Origin said. The statement said "a major Kraken customer," which it did not name, and Daniel Sundheim's hedge fund D1 Capital Partners were involved in the investment round. Origin will also invest $140 million as part of the process. "In signing this major new customer, Kraken is rapidly closing in on its 100 million customer account target well ahead of plan," said Origin CEO Frank Calabria. Octopus Energy will retain a 13.7% stake in Kraken following the spin-out, while Origin's interest in Kraken remains at 22.7%. "We believe these transactions put Octopus and Kraken in a strong position to unlock their next phase of growth, underpinned by the appropriate capital structure," Calabria added. Kraken supplies energy software to utility companies, including EDF and E.ON. Its contracted annual recurring revenue more than doubled in the last 18 months, according to Origin Energy. Earlier this year, Kraken CEO Amir Orad told CNBC's "Squawk Box Europe" that the company has a "very strong investor base" that focuses on energy and utilities.

Octopus Energy spins out AI-native utility software subsidiary Kraken - SiliconANGLE

Octopus Energy spins out AI-native utility software subsidiary Kraken British clean energy giant Octopus Energy Group Ltd. has announced it's spinning off its most valuable technology asset as a standalone entity. The company said its Kraken Technologies Ltd. subsidiary will become an independent company valued at $8.65 billion after it closed on a $1 billion funding round led by D1 Capital Partners. Octopus said it's investing an additional $320 million into Kraken through its investment arm Octopus Capital, which will enable it to retain a 13.7% ownership stake in the software entity once its separation is finalized. Kraken is the developer of a specialized operating system for utilities providers that uses artificial intelligence agents to automate the delivery of services such as electricity, gas, water and telecommunications. Its platform also enhances customer service and facilitates the rapid delivery of new products and services relating to those utilities, and has been licensed by more than 40 utility providers across 27 countries, serving more than 70 million customer accounts. . Kraken's clients include energy giants such as Électricité de France SA, National Grid USA Service Company Inc. and Tokyo Gas Co. Ltd. In September, it disclosed annual recurring revenue of more than $500 million. Octopus founder Greg Jackson said in a statement that his company set out to create Kraken as a platform that would transform the utilities industry, and said the company is now "smashing it" globally. "I set the embarrassingly low goal of 100,000,000 accounts by 2027," he said. "It looks like it'll beat that and can now aim to serve a billion people over the next decade." As a standalone entity, Kraken will be led by its current Chief Executive Officer Amir Orad, who said spinning out will give the company more freedom to invest and expand its business. "We'll keep pushing innovation in the cloud, advancing our utility-grade AI and harnessing vast amounts of energy and grid data, while ensuring structural clarity for customers, investors, and partners," he promised. Kraken's $1 billion funding round also received backing from the Ontario Teachers' Pension Plan, Fidelity International and Durable Capital Partners. The round suggests there is growing confidence in utilities software's potential to become a high-growth sector amid a global transition to cleaner energy sources, the company said. Another major backer of Kraken is the Australian energy giant Origin Energy Ltd., which has invested $140 million into the raise and obtained a 22.7% stake in the startup. As part of the arrangement, Origin agreed to drop its exclusivity arrangement for an extra 1.5% equity interest, which means Kraken's software will be available to more energy providers in the country.