AI Power Platform Kraken Valued at $8.7 Billion, Origin Says
(Bloomberg) -- Origin Energy Ltd. said Kraken Technologies Ltd., which helps utilities manage the transition to cleaner energy, has been valued at $8.65 billion after the software platform’s first share sale.
Kraken is owned by Octopus Energy Group Ltd., in which Origin is a major investor. The artificial intelligence software has been key to Octopus’s rapid growth into the UK’s largest electricity supplier, leapfrogging industry incumbents to serve more than 7 million customers in the country.
Kraken will raise $1 billion in equity from new and existing shareholders, paving the way for a formal separation from Octopus in the middle of next year, Origin said Tuesday in a statement. The Sydney-listed company’s shares rose as much as 1% on Tuesday.
“Origin has always held a deep conviction in the potential of Kraken,” Origin Chief Executive Officer Frank Calabria said in the statement.
D1 Capital Partners will become one of the new investors in Kraken, Origin said, along with an unidentified “leading energy retailer” with more than 10 million clients that will also become a customer of the software platform. Other new shareholders include Fidelity International, Durable Capital Partners and an arm of Ontario Teachers’ Pension Plan Board, Octopus said in a separate statement.
Kraken’s software has been licensed to other energy providers, allowing them to balance out power flows to households as energy-transition technologies like electric vehicles, home batteries, solar panels and heat pumps become more widespread. Its operating system is contracted to serve more than 70 million accounts worldwide through licensing agreements, according to Octopus.
The demerger will enable Kraken to operate as a fully independent technology platform with its own governance and leadership, according to Octopus. It will allow the utility to focus on scaling its consumer, generation, and clean technology businesses, it said.
“Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities, with Octopus Energy remaining a key innovation partner and forward-thinking global customer,” said Amir Orad, CEO of Kraken.
Origin also agreed to waive its exclusivity to the Kraken platform in Australia in exchange for an additional 1.5% stake, offsetting dilution from the sale, it said Tuesday. After the equity raising and the separation of Kraken from Octopus, Origin will hold a direct interest in Kraken of 22.7% in Kraken and 22.7% in Octopus.
Suppliers can use Kraken’s software to offer cheaper deals to customers and incentives for them to ramp up demand. This helps manage the fluctuations in electricity flows that come with a more renewables-heavy grid.
(Updates with other shareholders in sixth paragraph)
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