Origin Makes Further Investment in UK Retailer

Australian gas and power retailer Origin Energy on December 23 said it will invest an additional £36mn ($48mn) in UK energy retailer Octopus Energy to maintain its 20% equity interest in the company.

This comes on the same day Tokyo Gas announced it will take a 9.7% equity share in Octopus for $200mn. Tokyo Gas will launch Octopus into the Japanese market and establish a new retailer, TG Octopus Energy, which will supply 100% renewable energy. Octopus will licence its Kraken technology platform to TG Octopus Energy on a per-customer basis.

“We are lifting our investment in Octopus to maintain our 20% equity share because we see strong potential in our strategic partnership, underpinned by our confidence in Octopus’ operating model, market-leading technology and management team,” Origin CEO Frank Calabria said.

Origin first acquired a 20% interest in Octopus for $327mn in May this year. It acquired the licence to use Octopus’ Kraken platform in Australia. “There has been a material value uplift in Octopus Energy since our initial investment in May this year, evidencing the company’s impressive growth trajectory,” Calabria said.

Origin’s further investment in Octopus is on the same commercial terms as Tokyo Gas and will be paid in three tranches based on agreed milestones, with 75% expected in FY2021 and the remainder in FY2022 and FY2023.

The terms have been agreed and formal execution of the transaction will take place and will become binding when the transaction between Octopus and Tokyo Gas is executed, Origin said. This is expected to occur in the first quarter of 2021.