Octopus Energy Group is preparing to spin off its technology platform, Kraken Technologies, in a demerger that could value the business at up to £10bn ($12.9bn), according to Sky News.

The UK-based energy supplier is reportedly close to appointing Citi, Goldman Sachs, JP Morgan, and Morgan Stanley to oversee the process. The transaction is expected to complete within the next year.

Under the proposed structure, Kraken would become a standalone entity, with Octopus shareholders receiving equity in the new company. Up to 20% of Kraken may be sold to external investors as part of the deal to validate its valuation.

Kraken, which provides software infrastructure to utility providers, counts EON, EDF Energy, Severn Trent, and Cuckoo among its UK clients. Its international reach includes Origin Energy in Australia, Tokyo Gas in Japan, and Plenitude in France and Greece. The platform recently secured a contract with National Grid in the US to serve 6.5m customers across New York and Massachusetts.

The demerger could ease conflict-of-interest concerns among potential clients hesitant to use a system owned by a competing energy supplier. Insiders told Sky News the separation is also seen as a step toward a future stock market listing, though a venue has yet to be determined.

Earlier, Generation Investment Management, the sustainability-focused firm founded by former US Vice President Al Gore, and Canada Pension Plan Investment Board increased their stakes in Octopus in a deal that valued the company at $9bn (£7.2bn).

Octopus, now the UK’s largest residential energy supplier with 7.5m domestic customers and another 2.5m abroad, could see its valuation exceed £15bn following the Kraken spin-off.

Source: Sky News

If you think we missed any important news, please do not hesitate to contact us at news@pe-insights.com.

Can`t stop reading? Read more.