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Octopus Energy agrees USD600m deal with Generation Investment Management

Octopus Energy Group has entered into a major strategic partnership with Generation Investment Management, a firm established in 2004 to back businesses driving sustainability and the fight against climate change, in a deal that valued the UK entech pioneer at USD4 billion pre-deal, and up to USD4.6 billion post-deal.

The agreement, which has been several months in the making, will see Generation’s Long-term Equity strategy take a stake of up to approximately 13 per cent in the business. Octopus will use the proceeds of Generation’s strategic investment to turbo boost its mission to drive the renewable revolution globally.

Octopus’s technology platform, Kraken, is already contracted to deliver outstanding customer experience, hyper efficient operations and cleaner and smarter energy solutions to 17 million energy accounts globally, through Octopus’s own retail businesses in the UK, USA, Germany, Spain and New Zealand, plus licensing agreements with Good Energy, Hanwha Corporation, Origin Energy, nPower and E.ON.

Managing over GBP3 billion of renewable generation, Octopus is one of the UK’s leading electricity generators, creating enough green energy to power about 1.5 million homes.

Octopus established the Centre for Net Zero, an independent London-based research facility that is taking the fight against climate change to government level, by bringing together the biggest and best brains in tech, environment, econometrics and policy to create research and tools that governments and businesses around the world will be able to use to accelerate the update of clean technologies and green energy. 

They are also investing GBP10 million into the UK’s first R&D and Training Centre for Decarbonisation of Heat, a 22,000 sq m newly constructed state of the art facility dedicated to creating a greener, cheaper way of heating our homes by investigating heat pump and electric boiler solutions. The Centre combines the cutting edge of R&D, with two state of the art weather chambers and multiple test rigs adding hardware development and market expertise to their software heritage and setting the UK up for a stake in the global export of clean heating technologies. The Centre will also offer bespoke training capabilities to create thousands of jobs in this new sector over the next few years.

The deal sees Generation take up to an approximately 13 per cent equity stake for consideration of up to USD600 million, alongside an approximate USD55 million equity investment from Origin Energy, to continue its global expansion and technology development. This will see Octopus enhancing its smart grid capability and commitment to driving the green energy revolution around the world, with an ambition to support 100 million energy accounts on Kraken by 2027. 

In the last 18 months, the fast-growth disruptor has launched in the USA and Germany, as well as deepening its capabilities with the acquisition of Upside Energy, specialists in smart grid technology. In the UK it has launched Electric Juice, the UK’s first electric vehicle roaming network which has rapidly grown to over 100,000 charge points across Europe, and also partnered with Tesla to launch Tesla Power in the UK and Germany. Since launching to the market, Octopus has won more than 80 awards for its customer service, its technology and its business leadership, including the National Technology Awards, the International Business Awards and the USwitch Energy Awards. Octopus Energy is also the only company to be Recommended by the UK consumer association, Which?, for all of the last four years.

Speaking for Octopus Energy, Founder and CEO, Greg Jackson says: “Whilst the UK energy market is currently in a tough state, it’s highlighted the need for investment in renewables and technologies to end our reliance on fossil fuels. So we are delighted to announce our agreement with Generation Investment Management, created to back sustainable companies changing the world for the better. Three years ago, the management team of Octopus Energy met to discuss growth plans for our fledgling company. We watched An Inconvenient Sequel and were inspired to accelerate and expand our mission to make energy greener faster, cheaper, across the globe. Being backed by Generation, co-founded and chaired by Al Gore, enables us to make that dream come true.”

Speaking for Generation Investment Management, Tom Hodges, Partner in the Long-term Equity strategy, says: “Octopus Energy has an extraordinarily good fit with Generation’s mission of investing over the long term to support system and climate-positive companies. The world is at the early stages of an unprecedented energy transition which is essential to reach the goals of the Paris Agreement. This can be done in a way that is better for the environment and consumers. Octopus and its software platform Kraken are at the forefront of innovation and helping to create the dynamic and flexible renewable energy system needed. Generation is pleased to partner with Octopus Energy to help build that future.”

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