Aware Super extends reach into energy transition opportunity with Octopus Energy

Aware Super has signalled its confidence in the energy transition opportunity with participation in a $US370 million (c. £300 million) investment into one of the UK’s leading post-transition green energy majors via existing shareholders Generation Investment Management (GIM) and Canada Pension Plan Investment Board (CPP Investments).

The major, Octopus Energy (OE), is headquartered in the UK and operates across energy retail, asset management and technology with products focused on enabling utilities to support customers through the energy transition.

OE currently has more than 8 million retail customers worldwide – with almost 7 million in the UK – and acquired Shell Energy in December last year to become the UK’s largest electricity supplier.

In addition, it also holds Kraken, a proprietary technology platform which is the world’s fastest-growing energy software that currently unlocks transition at scale through 54 million contracted licences, positioning Octopus more than halfway to its target of 100 million customer accounts contracted to the platform by 2027.

GIM, a global sustainable investment manager, secured new backing for this opportunity from Australia’s $A175 billion Aware Super and a large American pension fund.

GIM now owns 13% of the Octopus Energy Group. CPP Investments also chose to invest more into Octopus, increasing its stake in the company to 12 per cent.

Aware Super’s investment was via a secondary trade alongside GIM and CPP Investments.

The deal increases the global energy and technology group’s valuation by 15 per cent on the last investment round, totalling $US9 billion (£7.2 billion).

In announcing the transaction, Aware Super Global Head of Private Equity Jenny Newmarch highlighted the attraction of working alongside GIM and its Private Equity investment strategy of pursuing well-established, private mid-to-late-stage growth companies that are true leaders in sustainability.

“We’re thrilled to work with Generation Investment Management to contribute to Octopus Energy’s dynamic growth story,” she said.

“Octopus Energy is a rare example of a business that has proven its ability to deliver both impact and financial returns at scale”.

Tom Hodges, Co-Head of Private Equity at Generation Investment Management, said: “It is clear that Octopus is a generational opportunity. The company has accelerated ahead of its UK peers in energy and in Kraken has developed the first credible digitisation platform for utilities.

“We’re backing the world-class management team and the thousands of talented people in the Octopus Energy Group as they transform multiple industries at once, and it’s a pleasure to work with funds including Aware Super to deliver this huge potential.”

Greg Jackson, Founder of Octopus Energy Group, said: “Bringing globally respected long-term investors on board helps raise our profile in key markets, and opens up new opportunities to continue our international expansion.

“I’m delighted to partner with more pension funds, including Aware Super, and am excited at the prospect of accelerating Octopus and Kraken in North America and beyond, and continuing to invest in technologies that drive a smarter, cheaper energy system.

“I’m grateful to our hugely supportive existing investors for making this possible, and their continued commitment to our long-term mission.”

Bill Rogers, Managing Director, Global Head of Sustainable Energies at CPP Investments, said: “Through this increased commitment to Octopus Energy, we are pleased to support the business as it enters this next period of growth. As a pioneering and tech-enabled energy company, Octopus Energy has an expanding global footprint and remains a leader and innovator in the energy sector, through both its customer propositions and its support of the global energy transition.”

Aware Super Head of International and Deputy Chief Investment Officer Damien Webb said the transaction was proof of the fund’s momentum directly in UK and European markets since its launch in London last year.

“When we established our first international office, we did so with the aim of being able to directly source and tap into new markets on behalf of our 1.1 million members.

“As a $175 billion fund with a future growth trajectory, it’s essential we originate new deals across private equity, infrastructure and property, in order to generate scale, lower fees and deliver strong risk-adjusted returns for our members back in Australia.

“Today’s announcement is a strong signal that we are making real strides to realising our fund’s growth strategy through our UK presence.”

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