British Business Bank invests £25M in Kraken Technologies

The UK government-backed British Business Bank (BBB) is taking a £25m stake in Kraken Technologies, the software entity being spun out of Octopus Energy, marking the bank's biggest ever direct investment into a private firm.

Octopus Energy sold a $1bn stake in Kraken last month to a syndicate of investors, paving the way for its demerger from Octopus Energy and a possible stock market flotation in the future.  

Octopus Energy founder and chief executive Greg Jackson told the BBC there was "every chance" Kraken would list its shares "in the medium term", with the location of the flotation "between London and the US".  

A press release from the Department for Business & Trade, detailing the £25m investment from the economic development bank, mentioned that Kraken, which has 70m customers, “may list in London" following its split from Octopus Energy.  

Peter Kyle, the UK business secretary, told the FT that the government investment in Kraken was part of a move to keep it based in the UK.  

Kraken leverages AI to automate customer service and billing for energy firms, making it easier to manage customer billing, smart meters and home batteries. 

The investment from the BBB in Kraken, valued at $8.65bn last month, follows last year’s reforms to the BBB, which saw its funding capacity upped from £15.6bn to £25.6bn, which means that it can scale up the direct investment arm of the bank.  

The BBB is also investing £50 million each into two deep tech funds: Epidarex Capital and IQ Capital.

Jackson said: “Over the past decade, we’ve built Kraken from zero into a true powerhouse.   

"It now plays in a league of its own and is ready to spin out of Octopus – and with backing from world-class investors like the British Business Bank and Octopus Ventures, it’s poised to grow even faster and cement its position as a UK-founded, UK-funded success story.”

Jordan Cummins, UK competitiveness director, Confederation of British Industry (CBI), said: “Cutting red tape and helping businesses scale-up is central to our collective growth mission.

"This latest package from government is therefore a good step on the journey to helping the growing firms of today become the global leaders of tomorrow. Maximising the catalytic role of the British Business Bank and making big bets on battery technology are smart moves to keep the UK competitive."