UPDATE: The founder of Octopus Energy, Greg Jackson, has urgently called for action to position London as the top choice for a potential IPO of its £6.4 billion Kraken Technologies division. As Octopus Energy prepares to demerge this software division in the coming months, Jackson emphasizes the need for the London Stock Exchange (LSE) to enhance its appeal for new listings.
In an exclusive statement to the Press Association, Jackson revealed that a stock market flotation is being discussed as a viable option within the next two to three years following the demerger. He expressed a strong preference for London but noted the current decision is a “coin toss” between the UK and New York. Jackson stated, “Speaking as the founder, shareholder, and a Brit, I would love it to be London. But I would need to see more hustle from the London Stock Exchange – they need to be bringing in more capital.”
Jackson’s remarks come on the heels of Octopus Energy’s recent decision to sell approximately $1 billion (£740 million) of equity in Kraken to a consortium that includes major investors like D1 Capital Partners and Fidelity International. This investment values Kraken at $8.65 billion (£6.4 billion) and positions the division for future growth.
The urgency is heightened by Octopus Energy’s significant financial challenges. The firm reported a staggering £260.1 million pre-tax loss for the year ending April 30, compared to profits of £77.6 million the previous year. This downturn is attributed to a sharp decline in energy demand due to unprecedented warm weather, which reduced gas usage by 11% in March and 25% in April. Jackson pointed out that the hottest spring on record since 1885 played a crucial role in the company’s losses, impacting underlying earnings by approximately £103 million.
Despite the financial setbacks, Octopus Energy continues to grow its customer base, now boasting 7.6 million customers in the UK, and it has overtaken British Gas as the country’s largest energy supplier, holding a market share of 24%. The group also saw its revenues rise by 10% to £13.7 billion.
Looking ahead, Jackson emphasized the need for ongoing efforts to enhance London’s stock market environment. “We need to see ongoing efforts to improve London for companies and for investors,” he asserted. He also highlighted the role of the UK Government in encouraging local pension funds to invest in UK companies, urging a collaborative approach to bolster the financial landscape.
Octopus Energy’s plans to spin off Kraken, which serves over 70 million energy accounts globally, aim to accelerate its expansion. The AI-powered platform has attracted several clients, including EDF and the National Grid US. As the demerger approaches, the focus on Kraken’s future growth intensifies, and the stakes for London as a financial hub have never been higher.
With £1.5 billion in net assets, Octopus Energy’s financial resilience remains a focal point, even as it navigates regulatory challenges with Ofgem. As the company works to meet capital adequacy requirements, the upcoming decisions regarding Kraken’s IPO could reshape the future of London’s stock market.
Stay tuned as this story develops, with potential implications not just for Octopus Energy, but for the broader landscape of UK finance and investment.
