A state-backed Saudi utility is taking a stake in Kraken, the software business set up by Octopus Energy Group, in a deal which involves a regional partnership underpinning its recently attained near-$9bn (£6.7bn) valuation.
MEZIESBLG has learnt that Saudi Energy – which until February was called Saudi Electricity Company – has agreed a deal that will see it owning a minority shareholding in Kraken.
As part of the transaction, Saudi Energy and Kraken are forming a regional joint venture to deploy the latter’s platform across the Middle East and North Africa.
Kraken will also be rolled out across Saudi Energy’s domestic customer base of roughly 11 million accounts, according to insiders.
Saudi Energy is majority-owned by the Gulf state’s sovereign wealth fund, PIF, which also owns a controlling stake in Newcastle United Football Club.
One source said the deal could be announced in the coming weeks.
It comes just over three months after Kraken confirmed a $1bn funding round led by D1 Capital Partners, a prominent investor in technology businesses.
The capital injection – Kraken’s first as a standalone company – also included investment from Fidelity International and Ontario Teachers’ Pension Plan.
The demerger of Kraken – revealed by Sky News last July – left Octopus Energy with a 13.7% stake in the software unit.
It bolstered Octopus Energy chief executive Greg Jackson’s paper fortune and underlined his success at building a globally significant British-based company over the last decade.
Octopus Energy now has more than 7.5 million retail customers in Britain, following its 2022 rescue of the collapsed energy supplier Bulb, and the subsequent acquisition of Shell’s home energy business.
In January 2025, it announced that it had become the country’s biggest supplier – surpassing Centrica-owned British Gas – with a 24% market share.
It also has a further 2.5 million customers outside the UK.
Kraken’s operating system is now licensed to serve more than 70 million customer accounts across the energy, telecoms and water sectors globally.
It connects all parts of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries.
The business also unlocks smart grids which enable people to use more renewable energy when there is an abundant supply of it.
In the UK, its platform is licensed to Octopus Energy’s rivals EON and EDF Energy, as well as the water company Severn Trent and broadband provider Cuckoo.
Overseas, Kraken serves Origin Energy in Australia, Japan’s Tokyo Gas and Plentitude in countries including France and Greece.
Last September, it announced that its contracted annual revenue exceeded $500m – a fourfold rise in just three years.
The state-owned British Business Bank has also taken a modest stake in Kraken, with a public listing of its shares likely in the UK or US in the coming years.
With the Saudi Energy partnership, Kraken, which is chaired by Gavin Patterson, the former BT Group chief executive, is on track to hit a target of 100 million contracted customers by 2027.
In 2024, Kraken recruited Amir Orad, a former boss of NICE Actimize, a US-listed provider of enterprise software to global banks and Fortune 500 companies, as its first chief executive.
One key advantage of demerging Kraken from the rest of Octopus Energy Group was seen as removing the perception of a conflict of interest among potential customers of the technology platform.
A source said the unified corporate ownership of both businesses had acted as a deterrent to some energy suppliers.
Kraken has also diversified beyond the energy sector, and earlier this year joined a consortium which was exploring a takeover bid for stricken Thames Water.
Kraken declined to comment, while Saudi Energy could not be reached for comment.
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