Octopus Energy has hit a $2 billion (£1.5 billion) valuation as it announces an expansion into Asia thanks to a partnership with Tokyo Gas.
The agreement will see the companies launch the Octopus Energy brand in Japan as a 30:70 joint venture. Tokyo Gas will provide working capital and growth funding, with the Octopus Energy Group set to take $247 million (£184 million) of additional investment.
TG Octopus Energy will provide 100% renewable electricity amongst other services to customers in Japan, utilising the tech haven of Tokyo as a launchpad for further expansion into the Asian market. Currently, Japanese renewables lag behind the UK by 50%, accounting for 18.9% of electricity in 2019 compared with 37.9% in the same year in the UK.
As part of the deal, Tokyo Gas will take a 9.7% equity stake for a consideration of $200 million (£149 million). Origin Energy will also make an equity investment of $50 million (£37 million), building on its initial investment into Octopus Energy in April 2020, which helped turn the energy supplier into a ‘unicorn’ as its valuation tipped over the £1 billion mark.
Octopus Energy’s founder and CEO, Greg Jackson, said the joint venture will bring together “our exciting approach to renewable energy and technology to the world’s largest competitive energy market, and the investment will turbocharge our mission to revolutionise energy globally”.
“When Origin invested less than 8 months ago, we said it was fuel for stage two of our mission. Since then, Octopus Energy has accelerated that mission to make the global green revolution faster and cheaper by launching Octopus Energy Germany and New Zealand, acquiring Octopus Energy USA and acquiring Upside Energy to deepen our smart grid capabilities with their powerful technology.”
Octopus’s technology platform Kraken will be used by the joint venture, delivering an improved customer experience the company said. It is now used for over 17 million energy accounts globally through Octopus’s own retail businesses, as well as agreements with Good Energy, Hanwha Corporation, Origin Energy, nPower and E.On.
Speaking for Tokyo Gas, president and representative director, Takashi Uchida, said: “I believe Octopus Energy, which is delivering diversified tariffs and services using digital technology through low costs in the UK and overseas, is the most appropriate partner for Tokyo Gas. Through this partnership, we will contribute to the achievement of a better lifestyle for customers by realizing value creation and delivery tailored to every one of them.”
The joint venture follows Octopus Energy expanding into Germany in November, and the US thanks to the acquisition of Silicon Valley-based startup Evolve Energy.
“Our UK retail business has grown to 1.8 million households, joining the ranks of The New Big Six, whilst maintaining outstanding service levels throughout COVID-19,” added Jackson.
“We’ve launched Electric Juice, the first electric vehicle charging network and we have exciting plans for the electrification of heat.
“Tokyo Gas’s investment into Octopus Energy Group, and the additional investment from Origin, will enable our outstanding team to drive even faster at the forefront of the global energy revolution.”