Octopus Energy Group is on the brink of selling a big stake in its software arm, Kraken Technologies, at a valuation that will cement its status as one of Britain’s biggest private companies.
Sky News has learnt that Octopus Energy has lined up a syndicate of investors to buy between 10% and 20% of Kraken.
Sources said an investment was likely to value Kraken at between $9bn (£6.67bn) and $10bn (£7.4bn).
D1 Capital Partners, a leading investor in technology businesses, the fund management giant Fidelity and an arm of Canada’s Ontario Teachers Pension Plan are said to be among those participating in the deal.
Octopus Energy – now Britain’s biggest household gas and electricity supplier – engaged Goldman Sachs to handle the demerger of Kraken and the sale of a stake to external investors.
Sources said the deal was expected to be announced imminently.
The demerger plan – revealed by Sky News in July – will augment Octopus Energy chief executive Greg Jackson’s paper fortune, and underline his success at building a globally significant British-based company over the last decade.
UK pension funds eye stake in £4.5bn holiday giant Center Parcs
High street banking giants vie for £2.5bn wealth manager Evelyn
The UK’s worst Christmas gifts: Rotten fruit, used pyjamas and a Spurs book for a Chelsea fan
Octopus Energy now has more than 7.5 million retail customers in Britain, following its 2022 rescue of the collapsed energy supplier Bulb, and the subsequent acquisition of Shell’s home energy business.
In January, it announced that it had become the country’s biggest supplier – surpassing Centrica-owned British Gas – with a 24% market share.
It also has a further 2.5 million customers outside the UK.
Sources said a $10bn valuation of Kraken would imply that the whole group, including the retail supply business, was worth in the region of £15bn.
That would be double its valuation of little more than a year ago, when the company announced that it had secured new backing from funds Galvanize Climate Solutions and Lightrock.
Shortly before that, the former US vice president Al Gore’s firm, Generation Investment Management, and the Canada Pension Plan Investment Board increased their stakes in Octopus Energy in a transaction valuing the company at $9bn (£7.2bn).
Kraken is an operating system which is licensed to other energy providers, water companies and telecoms suppliers.
It connects all parts 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 business also unlocks smart grids which enable people to use more renewable energy when there is an abundant supply of it.
In the UK, its platform is licensed to Octopus Energy’s rivals EON and EDF Energy, as well as the water company Severn Trent and broadband provider Cuckoo.
Overseas, Kraken serves Origin Energy in Australia, Japan’s Tokyo Gas and Plentitude in countries including France and Greece.
Keep up with all the latest news from the UK and around the world by following Sky News
Kraken, which is chaired by Gavin Patterson, the former BT Group chief executive, is now contracted to more than 70 million customer accounts globally – putting it easily on track to hit a target of 100 million by 2027.
Earlier this year, Mr Jackson said that target now risked being seen as “embarrassingly unambitious”.
In July last year, Kraken recruited Amir Orad, a former boss of NICE Actimize, a US-listed provider of enterprise software to global banks and Fortune 500 companies, as its first chief executive.
One key advantage of demerging Kraken from the rest of Octopus Energy Group would be to remove the perception of a conflict of interest among potential customers of the technology platform.
A source said the unified corporate ownership of both businesses had acted as a deterrent to some energy suppliers.
Kraken has also diversified beyond the energy sector, and earlier this year joined a consortium which was exploring a takeover bid for stricken Thames Water.
Octopus Energy has been contacted for comment.
