Origin Energy
(ASX:ORG) plan to invest an additional $70 million (£38 million) in the UK energy regulator Octopus after generation investment management (GIM) invested $397 million (£211 million) into the company.
The deal with GIM values Octopus at more than $5.6 billion (£3 billion), about three times the value Octopus put on itself when Origin bought its original $500 million stake in May last year. The energy company's move was designed to hold its 20 per cent stake in Octopus, after GIM acquired a 7 per cent stake.
Octopus’ total UK customer base now holds approximately 5.3 million energy accounts comprising around 9.5 per cent of the UK market while Origin expects Octopus to continue its “rapid expansion”.
GIM will have an option to double its stake in Octopus, with Origin having an option to invest, to maintain its 20 per cent share if GIM exercises its option.
Octopus expects around $470 million (£250 million) in licensing revenue over the next three years based on its latest Kraken tech platform while also developing future energy products and services, including the decarbonisation of heat, smart meters and electric vehicle leasing and charging.
“Origin’s additional investment demonstrates our confidence in Octopus’ strategy, management team and growth prospects, confirmed by GIM, which is one of the world’s most innovative sustainable investment funds," said Origin CEO Frank Calabria.
Origin noted that Octopus will use the investment to accelerate its growth strategy focused on international expansion of technology licencing and energy retail, including innovative customer solutions such as electric vehicle charging and leasing capabilities and electric heat pump services.
“In the competitive and fast-changing energy sector, a technology-enabled retail business that delivers superior customer experience at low cost will be core to Origin’s continued success,” Frank continued.
Shares in Origin Energy
(ASX:ORG) are trading 4.9 per cent higher at $4.73.
