Kraken Is Now Valued at $8.65 Billion, Origin Energy Says

(Bloomberg) — Origin Energy Ltd. said Kraken Technologies Ltd., a software platform that helps utilities manage the transition to cleaner energy, is valued at $8.65 billion after the software company’s first independent raise.

Kraken played a key role in transforming Octopus Energy Group Ltd. into the UK’s largest electricity supplier, surpassing industry companies serving more than 7 million customers in the country. Sydney-listed Origin holds about a fifth of Octopus Energy.

Origin said Tuesday that Kraken will raise $1 billion in equity capital from new and existing shareholders in its first standalone share sale. This will pave the way for an official separation from Octopus, targeted for the middle of next year.

“Origin has always had a deep belief in the potential of Kraken, and we have been able to maintain our highly valued equity stake in Kraken while supporting the continued expansion of Octopus Energy,” Origin Chief Executive Officer Frank Calabria said in a statement.

Origin said D1 Capital Partners will be one of the new investors, and the “leading energy retailer” with more than 10 million customers will also be Kraken customers. The Australian utility will invest $140 million as part of the process.

Octopus announced plans to spin off Kraken in September. The software has been licensed to other energy providers; This allows them to balance the flow of power to homes as energy conversion technologies such as electric vehicles, home batteries, solar panels and heat pumps become more widespread.

Origin also agreed to waive its exclusivity to the Kraken platform in Australia in exchange for an additional 1.5% stake, offsetting the loss of water from the sale, according to a statement on Tuesday. Following the equity raise and the separation of Kraken from Octopus, Origin will hold a direct stake of 22.7% in Kraken and 22.7% in Octopus.

Suppliers can use Kraken’s software to offer customers cheaper deals and incentives to increase demand. This helps manage fluctuations in electricity flows that come with a renewable energy-heavy grid.

(Updates with details on the Kraken split from the fifth paragraph.)

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