Octopus Energy said that it would create nearly 2,000 jobs within the next year and a half after raising $600 million from Al Gore’s investment fund.
Generation Investment Management is buying a 13 per cent stake in the fast-growing gas and electricity supplier. Its investment will come in two equal tranches, with the second payment due in June next year, subject to certain conditions.
The deal values Octopus at $4.6 billion, including the new capital, leaving it on a par with Centrica, the owner of British Gas, whose history goes back to the early 19th century.
Origin Energy, of Australia, an existing investor, will plough a further $55 million into Octopus.
The investment round came a day after Octopus took on 580,000 customers of Avro Energy after it became the latest casualty of the unfolding crisis in the retail gas and electricity market.
The company will use the funds to accelerate its global expansion and to increase investment in its technology platform.
Greg Jackson, its co-founder and chief executive, said that he intended to double its 1,800-strong headcount within 18 months. Most of the new hires would be in the UK.
“We will invest massively in the technology behind decarbonisation. We have to move away from gas. Clean and green heating is the No 1 priority,” Jackson, 50 said.
The surge in wholesale gas prices has pushed weaker providers to the brink. Octopus, Britain’s fifth largest supplier, may have to step in again as Ofgem, the regulator, attempts to strike rescue deals for dozens of smaller players that are expected to run aground this winter.
Under the watchdog’s “supplier of last resort” process, companies can reclaim costs incurred by taking on customers of failed suppliers through an industry levy added to consumer bills.
Octopus is said to have mulled a bid for Bulb Energy, a rival that has about 1.7 million customers. Jackson declined to comment.
The company was founded in 2015 as a subsidiary of Octopus Group, the investment firm, by Greg Jackson, Stuart Jackson (no relation) and James Eddison.
After absorbing Avro, Octopus will have 3.1 million retail customers. It also manages more than £3 billion of solar, onshore wind and biomass projects. It is one of the UK’s leading electricity generators, creating enough green energy to power about 1.5 million homes. The company has retail businesses in Britain, the United States, Germany, Spain and New Zealand and licenses its technology to Good Energy, Hanwha of South Korea, Origin Energy, nPower and E.ON. Its Kraken software platform handles energy provision for 17 million homes. Jackson wants to have 100 million energy accounts on Kraken by 2027.
Generation Investment Management was founded by Gore, 73, and a former Goldman Sachs executive in 2004 as a specialist sustainability investor. Gore is chairman of the firm, which manages more than $36 billion for its investors. The former vice-president announced the investment over a video call to Octopus staff yesterday afternoon. Jackson said that the address left Octopus workers “speechless”.
Tom Hodges, a partner at Generation Investment Management, said that the world was facing an “unprecedented energy transition” if humanity was to reach the goals of the Paris Agreement. “Octopus and its software platform Kraken are at the forefront of innovation and helping to create the dynamic and flexible renewable energy system needed,” he added.