Origin invests another £94mn in UK's Octopus Energy
Australia’s Origin Energy has invested an additional £94mn ($114mn) in UK energy retailer Octopus Energy to maintain its 20% equity interest in the company, it said on July 26.
Origin last invested in Octopus in September last year. The Australian company said since then Octopus has grown to become the UK’s fifth largest energy retailer, increasing its customer base by 25% to 3.1mn.
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Octopus recently entered the French market through the acquisition of Plum Energie, adding 90,000 customers. According to Origin, Octopus’s technology platform, Kraken, is profitable and has doubled its revenue forecast for the next three years, to more than £500mn. In addition, renewable energy assets under management have increased by £600mn, to £4bn, it added.
The price of Origin’s investment is the same as the last investment in September 2021. It follows recent investments in Octopus by other major international investors, Canada Pension Plan Investment Board, Generation Investment Management and Tokyo Gas, which have invested a total of £175mn in the latest funding round. Recent capital raisings now value Octopus at more than £3.5mn, representing close to a four-fold increase in value since Origin’s initial investment in May 2020, the company said.
“We are very impressed with the way Octopus has navigated an incredibly challenging period for the UK energy market, with the company emerging much bigger and as the UK’s fifth largest retailer, better placed to deliver on its vision and growth strategy,” Origin CEO Frank Calabria said.
“Octopus has already grown materially in value since Origin’s initial investment in 2020, and we believe our incremental investment provides a return well above our internal hurdle and is strategically aligned with our ambition to lead the energy transition to net zero. We believe Octopus provides an important avenue for future growth,” Calabria added.
In Origin’s business, the migration of all electricity and gas customers to Kraken is progressing well and on track to be completed by the end of the 2022 calendar year. As of today, more than 2.3mn customer accounts are on Kraken, well over half of Origin’s customer base.
“We are delighted with the progress we are making on Kraken and the transformation of our retail operating model. Developing and operating Kraken in the complex Australian energy market further underscores our belief that the already profitable platform will be a leading global enterprise software platform through the energy transition,” Calabria said.