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Octopus Energy to spin off $8.65bn tech arm Kraken

Archie MitchellBusiness reporter

Getty Images Octopus energy van and two Octopus energy employees carrying a boiler Getty Images

Octopus Energy is set to spin off its Kraken Technologies arm as a standalone company after a deal to sell a stake in the platform valued it at $8.65bn (£6.4bn).

The energy giant, Britain’s biggest gas and electricity supplier, has sold a $1bn stake in the AI-based division to a group of investors led by New York-based D1 Capital Partners.

The move paves the way for Kraken to be demerged from Octopus, and for a potential stock market flotation for the business in the future.

Octopus 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”.

Kraken uses AI to automate customer service and billing for energy companies and can manage when customers use energy, rewarding them for reducing consumption at peak times.

It was initially built for use by Octopus but has since picked up a raft of other utilities clients, including EDF, E.On Next, TalkTalk and National Grid US. It now serves 70 million household and business accounts around the world.

The majority of the $1bn investment will go to Octopus to fund its expansion, with Kraken receiving the rest. Mr Jackson said Kraken will be operating completely independently of Octopus “within a few months”.

Other investors in the business included Fidelity International and a unit of Ontario Teachers’ Pension Plan, with Octopus maintaining a 13.7% stake in Kraken.

Kraken chief executive Amir Orad said the spinoff would give it the “focus and freedom” to grow, with the company having previously struggled to do business with Octopus’s rivals.

Mr Jackson said that for a large tech firm such as Kraken, the location for its share listing would be either London or the US.

“One thing about Kraken is we’ve got this global investor base… and so really the stock exchanges have got to kind of show why they are the right one for business.”

A London listing for Kraken’s shares would reverse a trend of firms snubbing the UK in favour of floating in the US.

Mr Jackson said Octopus had created 12,000 jobs in the UK, with 1,500 of these attributed to Kraken.

He said the company would keep its headquarters in the UK, and that “if London can be the right place to list, I would love that”.

“But it’s down to be where you’re going to get the most investor support and the most support from the stock exchange.”

The demerger comes amid the continued growth of Octopus Energy, which overtook British Gas to become the UK’s largest energy supplier earlier this year, serving 7.7 million households.

But it confirmed this year it was one of three retail energy firms that had not yet met regulator Ofgem’s financial resilience targets.

Octopus, which will unveil its annual results on Tuesday, said the cash injection would “almost double Octopus Energy Group’s already strong balance sheet”.

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Ducking, Bobbing, Weaving: Is This What People Want? : The electorate may be more focused on reality than some spin doctors think

Democratic presidential nominee Bill Clinton says he still plans to show up in East Lansing, Mich., next Tuesday. But if he does, it looks as if the Arkansas governor will be making a solo appearance rather than confronting President Bush face to face as the bipartisan Commission on Presidential Debates had hoped. The commission’s terms for debate have been rejected by the Bush campaign, forcing cancellation of next week’s encounter and quite possibly of the two others the commission has tried to arrange. Partisans can argue who gains from all this. What ought to be clear to everyone is that voters are the big losers.

The commission, headed by former Democratic Party chairman Paul G. Kirk Jr. and former Republican Party chairman Frank J. Fahrenkopf Jr., was formed in 1987 with the idea of taking all the partisan squabbling out of debate arrangements.

The commission proposed three 90-minute presidential debates and one debate between the vice presidential candidates, with questions put by a single moderator. Clinton accepted; Bush wants questions to be asked by a panel of journalists. That latter format allows–almost requires–shorter answers while cutting down on the opportunity for follow-up questions aimed at drawing out precise rather than general responses. By insisting on playing by its rules or refusing to play at all, the Bush camp is negating the bipartisan commission’s purpose.

FORUM OF IDEAS: Voters lose, because here for the first time in this campaign would have been a chance to gauge the candidates’ ideas for dealing with the nation’s problems through something other than carefully prepared formal statements or sound bites largely without content.

Here would have been a chance to see how well Bush and Clinton do on their feet, not just in brief responses and retorts, but in sustained exposition. Anyone who doubts that there is a public hunger for serious talk about serious problems, and a disgust with the glitz and sloganeering that most campaigning has become, is not reading the popular mood accurately.

Certainly Ross Perot sensed that hunger, which is why he encouraged a movement in his name, and certainly he senses it still, which is why as he told The Times this week he may reactivate his campaign. Perot’s biggest complaint is that neither Bush nor Clinton is talking about how he would control the swelling federal deficit, arguably the greatest drag on economic growth. He’s right; the candidates are ducking the issue, because if they were to take it on honestly they would be forced to speak about what is conventionally regarded as politically unspeakable. They would have to tell voters that the deficit can be controlled only by cutting spending, which means reducing a lot of government programs people cherish, or by increasing revenues, which means raising taxes. They won’t say that. Perot would, and in doing so he might just force Bush and Clinton finally to get specific about the deficit crisis.

TIME OF TWISTS: That would be one more twist in a campaign year that can already be seen as one of the most unusual in modern times. Two major developments are already apparent: the reshuffle facing Congress–especially the House, where come January as much as one-third of the membership may be new–and the large number of women who have entered contests for state and national offices and the large number who at this point stand a good chance at election in November. A record 11, for example, have already won primaries for Senate seats.

There will be no end to analyses about what it all means, but some preliminary judgments can be made right now. People seem increasingly to have gone from being cynical about the political process to being angry.

Incumbents are one evident target of this anger, while women candidates benefit because, among other reasons, many of them tend to be relatively new entrants into the political arena. It would be comforting to think that the shallowness and dishonesty of so much of what passes for political discourse have become no less a target of righteous public wrath. Certainly that would be one of the most positive things to take place in our political life in a very long time.

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