Valuation Logic for Spin-off and Independent Development of Energy Tech Companies and Insights from the Kraken Case

Octopus Energy recently announced the spin-off of its technology division Kraken into an independent company, valued at $8.65 billion, led by U.S. investment firm D1 Capital Partners. As an energy technology platform, Kraken already supports over 70 million customer accounts worldwide and plans to expand to 100 million accounts by 2027[1].

• Kraken currently supports 70 million customer accounts, with a target of 100 million by 2027
• Calculated by account value: $8.65 billion ÷ 70 million accounts ≈ $12.4 per account
• Comparing growth expectations: If it reaches 100 million accounts, the value per account will drop to $8.65, reflecting economies of scale

• According to Bloomberg Intelligence data, Kraken is licensed for use by major utility companies such as EDF, E.ON, Origin Energy, and Tokyo Gas[1]
• SaaS platforms typically use EV/Revenue or EV/ARR multiples for valuation
• Valuation multiples for energy tech SaaS are usually higher than traditional software due to their involvement in critical infrastructure

• Kraken’s automation features significantly reduce operational costs
• The valuation reflects the operational efficiency value created for utility companies
• It demonstrates unique value especially in addressing the volatility of clean energy transition[1]

According to corporate spin-off theory, spin-offs can unlock shareholder value through the following ways[2]:

1. Operational Independence
   : The technology division can raise funds and make decisions independently
2. Valuation Difference
   : The tech platform gets SaaS valuation multiples instead of traditional utility multiples
3. Management Focus
   : The team can focus on product innovation and customer expansion
4. Optimized Capital Allocation
   : Each business can receive targeted capital investment

: Octopus Energy became the largest electricity supplier in the UK in just 9 years since its founding, fully demonstrating the disruptive potential of software-driven models in the traditional utility market[1].

:

• Focus on energy retailers driven by technology platforms
• Evaluate the scalability of technology platforms and customer acquisition costs
• Examine the platform’s ability to address the complexity of energy transition

:

• Currently, 70 million customer accounts form a significant scale advantage
• Expected to reach 100 million accounts by 2027, with stronger network effects
• Adoption by large customers (e.g., EDF, E.ON) enhances the platform’s credibility

:

• High customer switching costs
• Data accumulation optimizes algorithms
• Position as an industry standard setter

:

• Before spin-off: As an internal division of Octopus Energy, it was difficult to get a reasonable valuation
• After spin-off: As an independent SaaS platform, it gets tech stock valuation multiples
• Driver of valuation increase: The market re-recognizes its tech attributes

:

• Digital investment in the energy industry should focus on hidden tech value
• Platform-based tech assets may be undervalued by parent companies
• Spin-off is a key path to identify and unlock such value

• Kraken reduces operational costs through automation
• Especially important during periods of energy price volatility

• Technology platforms enhance service quality
• Reduce customer churn rate

• Help utility companies manage the intermittency of renewable energy
• Support the integration of distributed energy resources

1. Potential Spin-off Targets
   : Look for traditional energy companies with strong technology platforms
2. Energy Tech Platforms
   : Focus on scalable SaaS solution providers
3. Beneficiaries of Digital Transformation
   : Invest in utility companies that adopt advanced technology platforms

1. Valuation Bubble Risk
   : Kraken once sought a valuation of $15 billion but actually closed at $8.65 billion, indicating that valuation expectations need to be cautious[1]
2. Technology Diffusion Risk
   : Large utility companies may build similar platforms themselves
3. Regulatory Risk
   : Changes in energy industry regulations may affect business models

• Customer Account Growth
  : Whether it can continuously expand the customer base
• Unit Economic Benefits
  : Whether the value per account increases with scale
• Technological Leadership
  : Whether it maintains a competitive advantage
• Internationalization Capability
  : Whether it can enter new markets

The Kraken spin-off case marks a new stage in the digital transformation of the energy industry. The

is that technology platforms incubated within traditional energy companies can obtain more reasonable valuations through spin-offs and create unique value for investors.

Future investment opportunities in the energy industry will be more in

rather than traditional asset-intensive models. Investors should re-examine the tech attributes of energy companies and identify undervalued digital assets.

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[1] Bloomberg - “Origin Says Kraken Valued at $8.65 Billion After Equity Raise” (https://www.bloomberg.com/news/articles/2025-12-29/origin-says-kraken-valued-at-8-65-billion-after-equity-raise)

[2] Investopedia - “Spin-Off, Split-Off, Carve-Out: Key Differences Explained” (https://www.investopedia.com/articles/investing/090715/comparing-spinoffs-splitoffs-and-carveouts.asp)

[3] Yahoo Finance - “Kraken Eyes $15 Billion Valuation in New $500 Million Funding Push” (https://finance.yahoo.com/news/kraken-eyes-15-billion-valuation-152346877.html)