Octopus Energy is making waves with a bold plan: it’s spinning off its technology division, Kraken Technologies, into a separate entity—and it’s brought in Goldman Sachs to explore selling a minority stake. The move signals Kraken is stepping out from its parent’s shadow and gearing up for global scale.
What’s Changing
- Kraken, which builds software used by global utilities and other firms—from customer billing to grid-management—has been part of Octopus Energy. Now, its separation is becoming official via the demerger plan.
- The deal could value Kraken at about US$10 billion. Octopus has chosen Goldman to handle the demerger and the possible sale of a small portion of ownership to external investors.
- Existing major shareholders may retain shares in the new standalone Kraken, while new external investors may also come in.
Kraken’s growth has come fast: it already licenses its platform to competitors of Octopus, including EDF and E.ON, as well as international names. It handles millions of customer accounts globally and manages functions for energy, renewables, and flexible grid services.
Why This Move Matters
- Independence & Trust: By separating Kraken, Octopus is trying to ease concerns from clients who saw a potential conflict—utilities leasing Kraken’s software but also competing at the retail level. Kraken being independent means clearer boundaries and perhaps more confidence from big utility customers.
- Fuel for Expansion: As a standalone business, Kraken can chase growth more aggressively—invest in innovation, enter new markets, strike new licensing deals—without being constrained by the needs of energy supply business.
- Potential IPO or New Capital: A minority stake sale often sets up for more moves: public listing, fundraising, or even further partnerships. With Kraken’s success, investors are watching closely.
- Validation of Value: Kraken’s licensing revenue and its growing customer base are validating the platform’s utility. The high valuation shows there’s real belief in the tech side of energy, not just the retail supply business.
Possible Risks & What to Keep an Eye On
- Valuation Pressure: A US$10bn valuation is ambitious. For that to stick, Kraken will need to maintain strong growth, reliability, and client satisfaction.
- Competition: As energy software becomes essential, other platforms will try to catch up. Kraken has first-mover and product breadth advantages, but others will fight hard.
- Regulatory & Operational Complexity: Splitting a business, managing licensing, and ensuring data handling/security across borders is messy and tightly regulated.
- Investor Expectations: If external investors come in, they’ll expect returns. Balancing growth, profitability, and reinvestment will be essential.
People & Vision Behind the Moves
Kraken has already shown leadership: its CEO noted that Kraken has operated with considerable autonomy for some time. With this demerger, that independence gets formalised. The technology team aims to serve utility clients fairly—regardless of whether they compete with Octopus Energy or not.
Octopus founder Greg Jackson has also hinted that improving how the tech arm is seen in the world—and how clients see it—is a key motive. The value isn’t just in the software itself, but in reputation, trust, and a belief in tech-powered energy.
Bottom Line
Octopus Energy’s decision to demerge Kraken and sell a minority stake is more than a financial manoeuvre—it’s a strategic pivot. It shows how energy companies increasingly see their software platforms as standalone powerhouses. If Kraken can stay sharp, scale well, and maintain trust, this could mark a turning point for how tech and energy blend. For customers and competitors alike, what happens next will be compelling to watch.