Octopus Energy spins out AI-native utility software subsidiary Kraken – News

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 is 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 million 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 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.

Image: Kraken