Octopus Energy Group Ltd. today announced plans to spin off its Kraken subsidiary, which sells software that helps utilities operate more efficiently.

The Wall Street Journal cited analysts as saying that the deal could value Kraken at $15 billion. It’s believed the software maker may seek to go public within one year of the deal’s completion.

Octopus Energy is a British electric utility that was launched in 2015 by an eponymous investment firm. Since then, it has become the U.K.’s largest energy supplier with a customer base of more than 7.7 million households. It also sells electrical vehicle charges, operates a car leasing service and competes in several adjacent markets.

The Kraken unit offers a software platform that utilities can use to manage power generation equipment such as wind turbines. The software tracks both the health and financial performance of hardware assets. Additionally, it includes a simulation tool that allows utilities to forecast how an asset might perform in the future.

Energy companies can also use Kraken’s platform to manage equipment installed on customer premises. When a consumer places an order for a residential heat bump or an EV charger, the software finds the nearest available technician who can install the system. A dispatching tool provides the technician with access to the project data needed to carry out the installation. 

The third major focus of Kraken’s platform is optimizing utilities’ customer service operations. A centralized support console enables help desk representatives to access meter data, customer billing records and related information. An artificial intelligence tool can summarize that information to speed up support ticket processing. 

The unit currently generates $500 million in annualized recurring revenue, a 300% jump from 2022. The utilities that use its software have a combined customer base of more than 75 million subscribers. Kraken hopes to increase that number to 100 million by 2027.

“Kraken is now a globally successful business in its own right, operating independently for some time – completing our journey to full independence is a strategic and inevitable next step,” said Chief Executive Officer Amir Orad. “We’ll keep pushing innovation in the cloud, advancing our utility-grade AI and harnessing vast amounts of energy and grid data, while ensuring structural clarity for customers, investors and partners.”

After the spinoff is finalized, investors in Kraken parent Octopus Energy will receive ownership stakes. The software maker reportedly hopes the move will make it easier to win contracts from utilities that compete with Octopus Energy.

Photo: Octopus Energy