UK’s Octopus welcomes more investors to Origin-backed group

The UK group, partially owned by Origin Energy, is now worth close to $14bn after fresh investment from Aware Super-backed Generation Investment Management.

Origin Energy chief executive Frank Calabria says the jump in valuation vindicates its 2018 decision. Picture: Britta Campion

Octopus Energy is now worth $US9bn ($13.6bn), a jump of 15 per cent in just six months, after two investors raised their stakes in the company partially owned by Origin Energy.

The chief executive of Britain’s largest energy retailer said the company is poised to continue its unprecedented growth.

The increase in the value of Octopus Energy cements the importance of the asset to Origin Energy, which has a 23 per cent stake.

Octopus is contributing ever larger amounts to Origin’s financials.

Greg Jackson, co-founder and chief executive of Octopus Energy, said the equity raise late last year had presented substantial interest and so plans were made for a new investment opportunity.

“There’s a queue of investors wanting to join the cap table. Some just weren’t able to move faster for the last round, so we’re just squeezing them in,” said Mr Jackson.

Frank Calabria, chief executive of Origin, said the revised valuation is further vindication of its 2018 investment decision.

“This latest investment and the increased valuation is further confirmation that Octopus Energy is seen as one of the world’s leading energy and technology companies, with a rapidly expanding retail footprint, operations spanning 18 countries, and with Kraken now clearly established as the world’s pre-eminent technology platform to transform energy and utilities,” said Mr Calabria.

“From the outset, Origin has held a deep conviction in the attractiveness and potential of Octopus’ unique capabilities and Kraken technology, supported by a highly capable management team. We are pleased to see a similar confidence from both existing and new investors, with their investment and profile providing for Octopus’ growth ambitions in key markets. We continue to believe Origin’s investment in Octopus will be an important driver of future growth,” Mr Calabria said.

Octopus said the $US370m (about £300m) investment came from Generation Investment Management, co-founded and chaired by former US vice-president Al Gore, and the Canada Pension Plan Investment Board.

The investment from Generation Investment Management was backed by Australia’s Aware Super and a large public pension fund in the US, which Octopus said declined to be named.

Generation Investment Management has now increased its ownership interest in Octopus to 13 per cent, from 11 per cent. Canada Pension Plan Investment Board increased its interest in Octopus to 12 per cent, from around 10 per cent.

Origin’s ownership of Octopus remains unchanged.

Octopus has grown rapidly from its inception in 2015.

Origin was an early investor and has since ploughed around $700m into the company, which has proved to be shrewd investment as the UK company sees sustained growth in licencing its operating platform, Kraken.

Kraken has more than 50 million accounts on its Kraken platform after striking deals with the likes of EDF UK and Tokyo Gas.

Mr Jackson has set a target of having 100m accounts on Kraken by 2027, a milestone that he said could easily be achieved.

“Our pipeline is extremely strong,” Mr Jackson told reporters in London.

“That would actually exceed 100m accounts.”

Octopus receives payments for each account on its Kraken platform, which allows energy companies to efficiently manage millions of accounts and orchestrate the vast array of household and business solar and batteries – saving millions of dollars in the process.

Octopus estimates Kraken allows companies that licence the platform to save £40 pounds ($76 per user).

Offering substantial savings of millions of dollars, Kraken is in hot demand, but Origin has an exclusive agreement through its equity stake.

Origin is unwilling to relinquish its competitive advantage, forcing the likes of AGL Energy to look at alternatives.

The Australian earlier this week revealed AGL is zeroing in on using the technology platform owned by UK-based OVO Energy after being unable to secure access to Kraken.

The popularity of Kraken has led to speculation that Octopus will eventually split its business into two, retail energy and Kraken.

Mr Jackson said Octopus has taken steps to separate the segments, placating any concern among users of Kraken that sensitive information could be shared, but a formal split was not on the agenda.