AI energy platform Kraken received $1 billion in financing and is about to be spun off and valued at nearly $8.7 billion

The Zhitong Finance App learned that Australian energy giant Origin Energy Ltd. said that its software platform Kraken Technologies Ltd., which helps utilities transition to clean energy, has reached a valuation of 8.65 billion US dollars after completing the first round of equity financing.

According to information, Kraken belongs to Octopus Energy Group Ltd., and Origin is an important investor in the latter. This artificial intelligence (AI) software is the key to Octopus' rapid rise as the UK's largest electricity supplier — it has grown by leaps and bounds to serve over 7 million users in the country.

Origin said in a statement on Tuesday that Kraken will raise $1 billion in equity capital from new and existing shareholders to pave the way for an official spin-off from Octopus in the middle of next year. Affected by this news, the Sydney-listed company's stock price rose as high as 1% intraday on Tuesday.

Origin CEO Frank Calabria said in the announcement: “Origin has always had strong confidence in Kraken's potential for growth.”

Origin revealed that D1 Capital Partners will be one of Kraken's new investors, while also taking a stake in an unnamed “leading energy retailer” — the company has more than 10 million customers and will also become users of the Kraken software platform in the future. Octopus added in another statement that other new shareholders include Fidelity International, Durable Capital Partners, and agencies under the Ontario Teachers Pension Plan Commission.

As energy transition technologies such as electric vehicles, household batteries, solar panels, and heat pumps become more popular, Kraken's software has been licensed to a number of energy suppliers to help them balance household electricity supply and demand. According to Octopus, through licensing agreements, the operating system has served more than 70 million accounts worldwide.

Octopus pointed out that the spin-off will make Kraken a fully autonomous technology platform with an independent governance structure, which will help it focus on expanding consumer services, power generation and clean technology businesses.

Amir Orad, CEO of Kraken, said, “Operating independently will give Kraken a clearer strategic direction and development freedom, and help it grow into a neutral operating system serving global utility companies. In the future, Octopus will remain Kraken's core innovation partner and forward-looking global customer.”

Origin also announced on Tuesday that it has agreed to relinquish its exclusive right to use the Kraken platform in Australia in exchange for an additional 1.5% share, thereby offsetting the dilution effect caused by this share sale. After completing the capital increase and spin-off, Origin will directly hold 22.7% of Kraken's shares and retain 22.7% of Octopus's shares.

Energy providers can use Kraken software to provide users with more preferential plans and adjust electricity demand through incentives. This helps meet the challenges of grid fluctuations brought about by an increase in the share of renewable energy.