(Dec 30): UK utility Octopus Energy Group Ltd has agreed to sell a stake in software unit Kraken Technologies at a valuation of US$8.65 billion as an initial step toward spinning the business off.
In its first funding round, Octopus sold about US$1 billion of equity in Kraken to a consortium of new and existing shareholders, it said in a statement.
The deal underscores growing demand among power utilities for advanced software that helps manage more intermittent renewables and integrate customer assets like electric vehicles and heat pumps into the grid.
The Kraken platform serves over 70 million accounts worldwide through licensing deals with large utilities and has been key to Octopus’s rapid growth into the UK’s largest electricity supplier.
The firm will retain a 13.7% stake in Kraken after the split. The funding round is being led by D1 Capital Partners and new investors including Fidelity International, Durable Capital Partners and an arm of the Ontario Teachers’ Pension Plan Board.
The demerger will enable Kraken to operate as a fully independent technology platform with its own governance and leadership, according to Octopus. It will also allow the utility to focus on scaling its consumer, generation, and clean technology businesses, it said.
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Origin Energy Ltd, a major investor in Octopus, said Tuesday (Dec 30) that the funding round will pave the way for Kraken’s formal separation from Octopus in the middle of next year. After that, Origin will hold a direct interest of 22.7% in Kraken and 22.7% in Octopus.
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