By Stuart Condie

SYDNEY--British renewable-energy startup Octopus Energy will spin off utility management platform Kraken Technologies at a valuation of $8.65 billion.

Octopus raised $1 billion in its first standalone funding round for Kraken, an artificial-intelligence platform used by global energy retailers, with more than 70 million customers between them.

New York's D1 Capital Partners, Ontario Teachers' Pension Plan, Fidelity International, and Maryland-based Durable Capital Partners joined existing investors, including Australia's Origin Energy, on the ownership register.

The separation of Kraken, which Octopus flagged in September and expects to occur by the middle of 2026, is seen by analysts as a precursor to a likely initial public offering. Kraken could be worth as much as $15 billion in such a scenario, those analysts have said.

Octopus will own almost 14% of the separated Kraken, which counts Origin, French energy giant EDF and Japan's Tokyo Gas among its customers. This year, Kraken also signed a deal with National Grid, in New York and Massachusetts, to act as the AI customer service and billing platform for six million U.S. customers.

"Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities," said Amir Orad, Kraken's chief executive.

Origin, which since 2020 has paid $1.04 billion to compile a near 23% stake in Octopus and Kraken, said Tuesday it expects separation by the middle of 2026. Its stake in Kraken is worth almost $2 billion following the equity raise.

Origin said it will invest an additional $140 million in Kraken as part of the round. It has secured an additional 1.5% equity interest in Kraken to offset the dilutive impact of the raise, in exchange for its surrender of exclusive Australian rights to use the platform.

It plans to hold on to its near 23% interest in Octopus.

"Origin has always held a deep conviction in the potential of Kraken," Origin Chief Executive Frank Calabria said.

The raise also brought on a new energy retailer customer, Origin said. It said the retailer had more than 10 million customer accounts but didn't give its name.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

December 30, 2025 00:43 ET (05:43 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.