A potential demerger of Kraken, the technology business owned by UK-based Octopus Energy, could positively impact Origin Energy’s valuation. According to Morgan Stanley analyst Rob Koh, a demerger valuing Kraken at $US10 billion ($15.4 billion) would add approximately $2 per share to Origin Energy’s valuation. Origin Energy is an Australian integrated energy company focused on power generation, energy retail, and natural gas production. Octopus Energy Group is a global clean energy tech business, driving the renewable energy transition.
Koh noted that Morgan Stanley’s base case valuation for Origin’s 22.7 per cent stake in Octopus is around $3.4 billion, or $1.96 per share. Their more optimistic valuation scenario estimates Origin’s stake at about $5 billion, which translates to roughly $3 per share. However, the bullish scenario values Kraken at about $US5.5 billion on a 100 per cent basis, decreasing Origin’s share value to about $1 per share.
The calculations follow recent reports by Sky News and the Financial Times suggesting that Octopus Energy is considering spinning off Kraken within the next year. These reports cited potential valuations for Kraken reaching up to £10 billion and $US10 billion, respectively. Origin Energy’s shares saw a 6.75 per cent increase on Monday following these reports. Origin Energy has not provided any comments regarding the news.
