Octopus Spins Out Kraken at $8.65B, Utilities Tech Repriced

Kraken separation prices utility software like a standalone tech business

Octopus Energy Group said on Dec. 30, 2025 it will spin off its AI-led technology unit Kraken after a $1 billion equity raise that values the platform at $8.65 billion. The transaction brings new investors into Kraken, led by D1 Capital Partners with participation from Ontario Teachers’ Pension Plan, Fidelity International and Durable Capital Partners, while Octopus also disclosed an additional $320 million injection into the wider group led by its investment arm.

The Octopus Kraken spinoff is designed to turn what began as in-house operating software into an independent supplier to rival utilities. Kraken is contracted to serve more than 70 million household and business accounts worldwide and Octopus said annual contracted revenues exceed $500 million, giving investors two key valuation anchors: recurring software income and an expanding global client base.

For markets, the immediate mechanism is valuation, not retail power pricing. A $8.65B software multiple inside an energy group can reset how investors price other utility software platforms, pull forward the Europe IPO pipeline for energy-transition tech, and influence capex narratives for grids, smart meters and flexibility tools that sit upstream of electricity demand growth.

Ownership reshuffle sets up a near-term liquidity event

Octopus said it will retain a 13.7% stake in Kraken post-spin, shifting most of the equity to a mix of existing shareholders and new investors. Origin Energy, the Australian utility that is also a major shareholder in Octopus, is investing $140 million into Kraken and is expected to hold 22.7% of the software business after the deal, while giving up exclusivity for Kraken’s services in Australia in exchange for the larger equity position.

The structure matters because it clarifies which entity owns the software economics versus the retail supply business. It also opens a path to a public listing for Kraken within about two years, a timeframe that would force investors to model software growth rates, churn, and operating margins rather than lumping Kraken into energy-supply cash flows.

Why Octopus is separating Kraken now

Kraken’s pitch is that modern utilities need a utility software platform built for real-time data, high-frequency settlement, and device-led demand swings from electric vehicles, home batteries and heat pumps. Octopus says Kraken processes about 15 billion new data points a day, and the platform has expanded beyond billing into areas such as smart meter operations, flexible tariffs, EV charging orchestration and customer service automation.

Spinning it out reduces conflicts when selling software to competitors. Kraken already supplies major utilities and networks including EDF, E.ON, National Grid’s U.S. operations and Tokyo Gas, relationships that are easier to scale when the platform is governed as an independent technology vendor rather than as a tool controlled by a competing retail supplier.

Market transmission runs through utilities, SaaS multiples, and credit

The Kraken $8.65B valuation frames utility tech as a growth software category, which can lift comparable multiples for digital infrastructure and grid optimization vendors while increasing scrutiny on those without recurring revenue or scalable deployment. That tends to push equity investors toward companies with contracted revenue backlogs and away from project-by-project consultancies that lack visibility.

Credit markets can also respond. Separating a high-growth software asset can improve funding flexibility by allowing debt and equity to be raised where returns are highest, while limiting cross-subsidies between retail supply and technology development. If Kraken moves toward IPO readiness, investors will watch whether it can demonstrate lower customer acquisition costs and expanding margins as it scales from 70 million accounts toward a stated ambition of 100 million by 2027.

Kraken’s business model is tied to the energy transition, not commodity prices

Kraken’s demand driver is operational complexity. As grids absorb more intermittent renewables and more electrified devices, utilities need systems that can forecast usage, manage device schedules, and keep service levels stable while reducing call-center load and billing errors. That is why energy-transition automation is a distinct theme from oil and gas cycles, and why the platform can be marketed globally even when power prices are falling.

The investable question is whether the platform converts that complexity into durable pricing power. A utility that runs its customer base on one operating system faces switching costs, but it also demands reliability and regulatory-grade security, which can lengthen sales cycles and delay revenue recognition compared with consumer software.

Investor lineup implies a growth plan with a public-market endpoint

The new shareholder group signals a preference for scaling contracted revenue and preparing for eventual public-market governance. The most important near-term KPI is contracted annual revenue and its conversion into cash after implementation costs, because utility software deployments can require multi-year migrations and integrations before margins stabilize.

Octopus’s decision to keep a minority stake aligns it with Kraken’s growth while reducing the perception that Kraken is only a captive tool. For Octopus Energy’s own valuation, monetizing part of Kraken provides a reference price for an asset that previously sat inside a private group structure, which can influence how future capital raises are priced for the retail and generation businesses.

Competitive pressure will show up in customer wins, not marketing claims

The utility software category is crowded with legacy billing vendors and newer cloud entrants. Kraken’s advantage is operational proof at scale across millions of accounts and a product suite built around data granularity, but it must keep expanding into new territories with different regulations, grid rules and consumer protections.

If Kraken adds more Tier 1 utility clients in North America, Japan and continental Europe, it strengthens the argument that utility operating systems are becoming a global platform business. If customer wins slow, the valuation will be judged more like a single-vendor enterprise software firm with heavier implementation costs.

What to watch next

Final governance and ownership documentation is the first trigger, including board structure, data ringfencing and how commercial contracts are transferred into the new entity in early 2026. A second trigger is customer announcements in the first half of 2026, especially new large-scale migrations that add multi-million-account deployments. A third trigger is disclosed financial metrics, including revenue growth and operating cost per account, which will shape IPO readiness and valuation. A fourth trigger is any guidance on where Kraken would list, because London versus New York can affect peer multiples and the depth of tech-focused capital available.