Heavyweights advise as Octopus Energy sells $1bn stake in tech arm

Freshfields, Skadden and Paul Weiss have landed mandates on Octopus Energy’s $1 billion investment round for its technology arm Kraken, valuing the business at $8.65 billion.

The transaction is the first standalone investment round into Kraken and paves the way for a spin-off of the technology company.

Freshfields acted for longstanding client Octopus, Skadden for Kraken, and Paul Weiss acted for lead investor, US investment firm D1 Capital Partners on the deal. The round also includes new investors Fidelity International, Durable Capital Partners and Ontario Teachers’ Pension Plan.

Powering global utilities

Kraken’s AI-powered operating system handles things like customer accounts and billings and serves around 70 million customers globally through licensing agreements with major utilities.

Octopus Energy founder Greg Jackson said: "Kraken is in a class of its own, in terms of technology, capability, and scale. As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story."

Demerger in the works

Octopus said the separation allows Kraken to operate as a fully independent technology platform globally, while enabling Octopus to focus on scaling its consumer, generation and clean technology businesses. Following the demerger, Octopus Energy Group will retain nearly a 14% stake in the business.

The Kraken spin-off sits within a period of rapid growth for the wider Octopus Energy Group. Launched in 2015, Octopus has overtaken British Gas to become the largest domestic household energy supplier in the UK by market share.

Advising

Freshfields acted for Octopus Energy, fielding a cross-practice team led by London corporate partners Ed Cole and Tom Godwin.

Paul Weiss advised lead investor D1 Capital Partners, led by New York-based private equity partner Edward T. Ackerman and London-based private equity partner Oliver Marcuse.

Skadden advised Kraken. The cross-practice team spanned corporate, capital markets, tax, employment and IP and included New York corporate partner Christopher Barlow and London-based corporate partner Denis Klimentchenko.