Origin Energy Ltd (ASX: ORG) shares have seen an upward trajectory on Tuesday morning, with the ASX 200 stock rising by 1% to $11.37 at the time of writing. This surge follows a significant announcement regarding its investment in Kraken Technologies, a move that has captured investor interest.
The energy giant’s shares are climbing as it unveiled a series of strategic transactions aimed at bolstering Kraken’s growth and technology leadership on a global scale. This development signals a formal separation from Octopus Energy, slated for mid-2026, supported by a substantial capital injection.
Strategic Investment in Kraken Technologies
Origin Energy disclosed that Kraken Technologies will raise US$1 billion in equity through its first standalone funding round. This capital infusion comes from a mix of new investors and existing shareholders, setting the stage for Kraken’s independence from Octopus Energy.
The investment round provides a valuation of Kraken as a standalone entity at US$8.65 billion. Origin plans to contribute US$140 million, approximately A$210 million, as part of this process, underscoring its commitment to Kraken’s growth trajectory.
New Licensing Agreement and Market Expansion
Further enhancing its market position, Kraken has signed a major licensing agreement with a leading energy retailer, adding over 10 million customer accounts to its platform. This strategic customer will also participate in the Kraken funding round, highlighting confidence in Kraken’s capabilities.
In a bid to expand its market share in Australia, Origin has agreed to waive its exclusivity rights to the Kraken platform in the country. In return, Origin will receive an additional 1.5% equity interest in Kraken, effectively offsetting any dilution from the funding round.
Post these transactions, Origin’s economic interest in Kraken will remain at 22.7%, while maintaining its strategic stake in Octopus Energy at the same percentage.
Management’s Vision and Future Prospects
Frank Calabria, CEO of Origin Energy, expressed optimism about the future, stating, “We have been on a path to separate Octopus Energy and Kraken Technologies, and through execution of these transactions, have now laid the foundations necessary for this to occur and enable both the businesses to pursue their growth ambitions with greater focus and financial strength.”
Calabria emphasized Origin’s conviction in Kraken’s potential, noting that the company has managed to retain its valuable equity stake while supporting Octopus Energy’s expansion.
“Octopus Energy and Kraken Technologies, supported by their first-class management teams, have continued to deliver impressive growth. In signing this major new customer, Kraken is rapidly closing in on its 100 million customer account target well ahead of plan,” Calabria added.
Implications and Market Reactions
The announcement comes as energy companies globally are navigating a rapidly evolving market landscape, driven by technological advancements and a shift towards sustainable energy solutions. Origin’s strategic maneuvers reflect its adaptability and foresight in aligning with these trends.
Analysts suggest that the successful separation and subsequent growth of Kraken and Octopus Energy could significantly enhance shareholder value. The move represents a calculated effort to unlock new growth opportunities and optimize capital structures.
As the energy sector continues to transform, Origin’s proactive approach in nurturing its investments in Kraken and Octopus Energy positions it well for future success. Investors and stakeholders will be keenly observing the developments as these entities embark on their next growth phases.
Looking ahead, the focus will be on how Kraken and Octopus Energy leverage their newfound independence and capital to drive innovation and capture market share in the competitive energy landscape.
