Octopus Energy agrees $600m deal with Generation Investment Management to accelerate global green energy mission
- Octopus Energy Group to take up to $600 million of additional investment from Generation Investment Management, increasing the entech group’s valuation to up to $4.6 billion
- Octopus Energy Group encompasses energy technology, renewable generation and energy retail across 12 countries
- Generation is a $36 billion fund management business with a specific remit to back sustainable businesses
London, 27 September 2021 - Octopus Energy Group today announces 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 $4 billion pre-deal, and up to $4.6 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% 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 £3b of renewable generation, Octopus is one of the UK’s leading electricity generators, creating enough green energy to power about 1.5m 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 £10 million into the UK's first R&D and Training Centre for Decarbonisation of Heat, a 22,000m3 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% equity stake for consideration of up to $600 million, alongside an approximate $55 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 4 years.
Speaking for Octopus Energy, Founder and CEO, Greg Jackson said:
“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. 3 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, said:
“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.”
Notes to editors
Technical footnote: The deal consists of $300 million immediate investment, with $300 million to follow by June 2022 subject to certain further funding conditions.
Octopus Energy had 2.5 million customers up to 24 September 2021. The company’s customer base grew to 3.1 million after taking on Avro Energy’s 600,000 customers on 25 September 2021.
All accompanying imagery can be found here.
All $ figures reference US dollars.
KPMG advised on this transaction.
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About Octopus Energy Group
Octopus Energy Group was launched in 2016 with a vision of using technology to make the green energy revolution affordable whilst transforming customer experiences. It is part of Octopus Group, which is a certified BCorp. Octopus’s domestic energy arm already serves 3.1 million customers with cheaper greener power, through Octopus Energy, M&S Energy, Affect Energy, Ebico, London Power and Co-op Energy.
Octopus Energy for Business manages over 25,000 customers with proprietary energy offerings. Octopus Electric Vehicles is helping make clean transport cheaper and easier, and Octopus Energy Services is bringing smart products to thousands of homes. Octopus Energy Generation is Europe’s largest investor in solar energy, managing a £3.4bn portfolio of renewable energy assets throughout the continent.
All of these are made possible by OEG's tech arm, Kraken Technologies, which offers a proprietary, in-house platform based on advanced data and machine learning capabilities, Kraken automates much of the energy supply chain to allow outstanding service and efficiency as the world transitions to a decentralised, decarbonised energy system. This technology has been licensed to support over 17 million accounts worldwide, through deals with Good Energy, E.ON energy and Origin Energy.
In December 2020, Octopus Energy Group was valued at over $2 billion after closing its second investment round of the year led by international energy companies Tokyo Gas and Origin Energy. With operations in the US, Japan, Germany, Spain, New Zealand and Australia, Octopus Energy Group's mission to drive the affordable green revolution is going global.
For more information, check out our website.
About Generation Investment Management
Generation Investment Management LLP is dedicated to long-term investing, integrated sustainability research and client alignment. It is an independent, private, owner-managed partnership established in 2004 and headquartered in London, with a US office in San Francisco. Generation Investment Management LLP is authorised and regulated in the United Kingdom by the Financial Conduct Authority.
Generation’s Long-term Equity strategy was established in 2018 to be a differentiated investment partner in support of a select number of private companies. The Long-term Equity strategy offers management teams support with achieving their ambitions for sustainable, global growth over eight to 15-year periods, far longer than the average private equity hold period.
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