British renewable energy company Octopus Energy is preparing to spin out its AI software unit, Kraken Technologies, following a $1 billion standalone funding round that values the business at $8.65 billion. The separation is targeted for mid-2026, according to Origin Energy, a major Octopus investor.
The funding round included participation from a major Kraken customer and hedge fund D1 Capital Partners, with Origin contributing $140 million. Octopus will retain a 13.7% stake in Kraken, while Origin holds 22.7%. Kraken provides energy software to utilities such as EDF and E.ON, and its contracted annual recurring revenue has more than doubled in the past 18 months.
Kraken CEO Amir Orad has emphasized the company’s focus on becoming a pure software business, positioning itself as a “modern operating system for utilities.” The spinout is expected to attract long-term software-focused investors and potentially pave the way for a public listing. This strategic move aligns with the growing trend of AI-driven energy infrastructure and enterprise software innovation.
