Britain's Octopus Energy to spin out Kraken at $8.65 billion valuation

Dec 29 (Reuters) - Britain's Octopus Energy said on Monday it will spin off its technology arm, Kraken, as an independent company valued at $8.65 billion, after a funding round led by U.S. investment firm D1 Capital Partners.

Kraken supplies energy software to major utilities and energy groups, including EDF, National Grid U.S. and Tokyo Gas.

New and existing investors will buy about $1 billion of equity in Kraken. Investors led by Octopus Capital will also inject an additional $320 million into Octopus Energy, the company said in a statement.

Investors in the round include Ontario Teachers' Pension Plan, Fidelity International and Durable Capital Partners, Britain's biggest household gas and electricity supplier said in a statement.

The investment clears the way for Kraken's formal demerger from Octopus Energy, which will retain a 13.7% stake in the firm.

The Financial Times reported late Monday that the demerger clears the path for a Kraken IPO within two years, potentially leading to an eventual flotation of the privately-held Octopus Energy.

Reuters could not immediately verify the report on Kraken's potential listing plans. Octopus Energy and Kraken did not immediately respond to a Reuters' request for comment.

Kraken licenses its AI-powered operating system to utilities worldwide and is contracted to serve more than 70 million accounts. In September, it reported contracted annual revenue of more than $500 million.

In a separate statement, Australia's Origin Energy said it will invest about $140 million in Kraken's fundraising and maintain a 22.7% interest in the platform after the transaction.

Origin also agreed to waive exclusivity for Kraken's services in Australia in exchange for an additional 1.5% equity interest.

($1 = 0.7413 pounds)

(Reporting by DhanushVignesh Babu, Unnamalai L and Rajveer Singh Pardesi in Bengaluru; Editing by Tasim Zahid)