Britain’s Octopus Energy to spin out Kraken at $8.65 billion valuation

Britain’s Octopus Energy said on Monday it will spin off its technology arm, Kraken, as an independent company valued at $8.65 billion, following a funding round led by U.S. investment firm D1 Capital Partners.

Under the deal, new and existing investors will purchase about $1 billion of equity in Kraken. Investors led by Octopus Capital will also inject an additional $320 million into Octopus Energy. Participants in the funding round include Ontario Teachers’ Pension Plan, Fidelity International and Durable Capital Partners.

The transaction clears the way for Kraken’s formal demerger from Octopus Energy, which will retain a 13.7% stake in the newly independent company. The Financial Times reported that the separation could pave the way for a Kraken initial public offering within two years, potentially followed by an eventual listing of the privately held Octopus Energy. Reuters could not independently verify the report, and both companies declined to comment on potential listing plans.

Kraken provides AI-powered energy operating software to major utilities worldwide, including EDF, National Grid US and Tokyo Gas. The platform is contracted to serve more than 70 million customer accounts globally and reported contracted annual revenue exceeding $500 million as of September.

In a separate statement, Origin Energy said it will invest about $140 million in Kraken’s fundraising and retain a 22.7% stake in the platform after the transaction. Origin also agreed to waive exclusivity for Kraken’s services in Australia in exchange for an additional 1.5% equity interest.