Octopus Energy Group has selected bankers to supervise the sale of a minority stake in Kraken Technologies, its multibillion-pound software division. Sky News has discovered that Octopus Energy, now the largest household gas and electricity provider in Britain, has enlisted Goldman Sachs to manage the demerger of Kraken Technologies. The Wall Street bank will also lead discussions with potential investors regarding the sale of a minority stake in Kraken, as per sources on Thursday.
A potential deal could value Kraken at around $10 billion, sources added. The demerger strategy, first disclosed by Sky News in July, would solidify Octopus Energy’s position as one of the UK’s most valuable private entities. A deal would increase Octopus Energy CEO Greg Jackson’s wealth on paper and highlight his accomplishment in establishing a globally significant British company over the past decade.
Currently, Octopus Energy has 7.5 million retail customers in the UK, following its 2022 rescue of the collapsed energy supplier Bulb and subsequent acquisition of Shell’s home energy business. In January, it announced its status as the country’s largest supplier, surpassing Centrica-owned British Gas, with a 24% market share. Additionally, it serves an additional 2.5 million customers outside the UK.
Sources suggest that a $10 billion valuation of Kraken would indicate that the entire group, including the retail supply business, is valued at around £15 billion. This would be double its valuation just over a year ago when it secured new funding from funds like Galvanize Climate Solutions and Lightrock. Before that, Al Gore’s firm, Generation Investment Management, and the Canada Pension Plan Investment Board increased their stakes in Octopus Energy in a deal valuing the company at $9 billion (£7.2 billion).
Kraken is a system licensed to various energy providers, water companies, and telecom suppliers. It integrates all aspects of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries. The platform also enables the use of more renewable energy during times of abundant supply through smart grids.
In the UK, Kraken’s platform is licensed to Octopus Energy’s competitors like EON and EDF Energy, as well as to companies like Severn Trent and Cuckoo. Internationally, it serves companies like Origin Energy in Australia, Tokyo Gas in Japan, and Plentitude in countries such as France and Greece. Kraken, chaired by Gavin Patterson, the former chief executive of BT Group, is currently contracted to over 70 million customer accounts globally, on track to reach a target of 100 million by 2027.
Last year in July, Kraken appointed Amir Orad, a former executive of NICE Actimize, as its first CEO. One of the main benefits of demerging Kraken from the rest of Octopus Energy Group would be to eliminate the perception of a conflict of interest among potential customers of the technology platform.
Kraken has also expanded beyond the energy sector and recently joined a consortium exploring a takeover bid for Thames Water. Octopus Energy declined to provide a comment.
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