Octopus hopes spin-off will power 1bn ambition
Britain’s biggest household energy supplier will spin out its software arm which could pave the way for an eventual initial public offering of the technology business.
Octopus Energy said the separation of Kraken Technologies would allow it to accelerate its international expansion and hit a goal of serving one billion households and businesses around the world within the next decade.
Kraken, which was initially developed for use within Octopus Energy, now licenses its technology to energy suppliers and water utilities, including rivals EDF, the French state-backed energy group, and E.on Next.
It is thought that the move to demerge the would make it easier to float Kraken. The combination of the software and energy supply businesses was thought to have made some rivals hesitant to use the Kraken platform.
Octopus had already tried to make Kraken more independent, appointing Gavin Patterson, the former boss of BT, as its chairman in 2023.
Greg Jackson, 54, founder and chief executive of Octopus Energy Group, said the business was “smashing it” and was now a “huge and successful company in its own right”.
“I set the embarrassingly low goal of 100 million accounts by 2027. It looks like it’ll beat that and can now aim to serve a billion people over the next decade,” he said.
Kraken serves 70 million customer accounts and has annual committed revenues of $500 million, a fourfold increase in three years. It is used by clients to manage customer billings as well as energy assets such as battery storage.
Tim Wan, the former finance chief at Asana, the American software company, will join Kraken in the same role.
Amir Orad, chief executive of Kraken, said the spin-off would give the company “more freedom to invest, expand and serve our utility clients equally”.
“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. We are aiming to accelerate the energy transition and positively impact people around the world.”
Octopus, founded in 2015, has expanded rapidly to become Britain’s biggest household energy supplier, overtaking British Gas, with more than 7.7 million customers in the UK as well as a further 2.8 million internationally including Spain and Germany. It is thought to be open to expanding into more markets globally.
Its customer numbers have been boosted by the acquisition of Shell’s retail energy business in 2023 and the bailout in 2022 of Bulb, the biggest energy supplier to go bust in the energy crisis. It has also invested in renewable energy assets including offshore wind and solar in the UK and America, valued at about £7 billion.
Octopus Energy generated revenue of £12.4 billion last year, compared with £12.5 billion in 2023, while pre-tax profit fell to £77.6 million, from £283 million, largely driven by higher marketing costs and hiring more staff.
Octopus investors include Generation Investment Management, chaired by Al Gore, the former US vice-president, and Canada Pension Plan Investment Board. It was valued at $9 billion at its latest investment round last year.
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