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An electric car of the Octopus Energy brand is parked in front of a modern suburban house in Folkestone, UK, March 19, 2025. The home features rooftop solar panels, highlighting its commitment to renewable energy. The scenario represents the growing adoption of sustainable energy solutions, with Octopus Energy playing a key role in promoting electric vehicles and solar integration. (Photo by Andrew Aitchison/Photo via Getty Images)
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British renewable energy startup Octopus Energy is to spin off its artificial intelligence technology unit Kraken Technologies, laying the foundation for a potential public listing.
Origin Energy, which holds a majority stake in Octopus, said in a statement statement Late Monday, Octopus raised $1 billion in its first independent funding round, valuing the business at $8.65 billion. Origin said the funding paves the way for a spin-off, which Octopus aims to complete by mid-2026.
“Kraken’s major client” (who was not named) and Daniel Sundheim’s hedge fund D1 Capital Partners participated in the round, the statement said. Origin will also invest $140 million as part of the process.
“With the signing of this major new customer, Kraken is quickly progressing towards its 100 million customer account goal,” said Origin CEO Frank Calabria.
After the spin-off, Octopus Energy will retain a 13.7% stake in Kraken, while Origin’s interest in Kraken will remain at 22.7%.
Calabria added: “We believe these transactions position Octopus and Kraken to achieve the next phase of growth, supported by an appropriate capital structure.”
Kraken provides energy software to utility companies such as EDF and E.ON. According to Origin Energy, its contracted annual recurring revenue has more than doubled over the past 18 months.
Earlier this year, Kraken CEO Amir Orad told CNBC’s “Squawk Box Europe” that the company has a “very strong investor base” focused on energy and utilities.
Kraken benefits from the Octopus acquisition as more energy companies license its technology, making the company what Orad calls “the modern operating system for utilities.”
When asked about a public listing in September, Orad told CNBC that “the opportunity is great,” but that Kraken needs to focus on becoming a pure-play software company.
“Over time, we expect to get more long-term, later-stage investors who are pure software. Today, we have a very strong investor base that is focused on energy and utilities. Over the years… given (the separation), we expect to evolve to become even more focused on software,” he said.
—CNBC’s Domi Suskova contributed to this report.
