Origin Energy Ltd (ASX: ORG) shares are on the move on Tuesday morning.
At the time of writing, the ASX 200 stock is up 1% to $11.37.
Why is this ASX 200 stock pushing higher?
Investors have been bidding the energy giant's shares higher today after it released an announcement relating to its investment in Kraken Technologies.
According to the release, there have been a suite of transactions that have been executed that highlight the continued growth of Kraken, reinforce the strength of its technology leadership in a global context, and provide the capital to support its formal separation from Octopus Energy.
Origin revealed that US$1 billion in equity will be raised in Kraken's first standalone raising from a pool of new investors and existing shareholders. This paves the way for a formal separation from Octopus Energy in mid-2026.
This investment round provides the first look through valuation of Kraken stand alone at US$8.65 billion. Origin plans to invest US$140 million (~A$210 million) as part of the process.
The release also advises that Kraken has signed a major licensing agreement with a leading energy retailer, which adds over 10 million customer accounts to its platform. This large strategic customer will also participate in the Kraken raising.
In order to grow its market share in Australia, Origin has agreed to waive exclusivity to the Kraken platform in the country. This is in exchange for an additional 1.5% equity interest in Kraken, which offsets dilution from the raising.
Post these transactions, Origin's economic interest in Kraken will remain 22.7%. It will also continue to hold its strategic stake in Octopus Energy at 22.7%, which it believes reflects the positive outlook for growth and valuation upside of both entities.
Management commentary
Commenting on the news, the ASX 200 stock's CEO, Frank Calabria, said:
We have been on a path to separate Octopus Energy and Kraken Technologies, and through execution of these transactions, have now laid the foundations necessary for this to occur and enable both the businesses to pursue their growth ambitions with greater focus and financial strength. Origin has always held a deep conviction in the potential of Kraken, and we have been able to maintain our highly valuable equity stake in Kraken, while supporting the continued expansion of Octopus Energy.
Octopus Energy and Kraken Technologies, supported by their first-class management teams, have continued to deliver impressive growth. In signing this major new customer, Kraken is rapidly closing in on its 100 million customer account target well ahead of plan. We believe these transactions put Octopus and Kraken in a strong position to unlock their next phase of growth, underpinned by the appropriate capital structure. We look forward to participating in the ongoing growth of both businesses.
