Shares in Value Logo
Product Review Img Vertical

Date : 24/12/2023

Origin Energy Ltd (ASX: ORG) Increased Stake in Octopus Energy with $530M Investment

Origin Energy Ltd (ASX: ORG) has made headlines with a notable rise in its share price. This surge is attributed to the company announcing a significant investment in Octopus Energy, a dynamic UK-based technology and energy company. Origin’s decision to escalate its investment in Octopus Energy marks an important milestone in its business strategy, signalling confidence in the potential of this partnership and the broader energy sector’s evolving landscape.

ORG: FY23 Highlights

ORG shares are trading at $8.15 and surged around 2 in the intraday trading session. The company’s current market cap is approximately 14.02B AUD.

asx org shares growth forecast

  1. Revenue: $16.53B, with a year-on-year (Y/Y) change of ↑13.45%
  2. Operating expense: $1.76B, with a Y/Y change of ↑3.41%
  3. Net income: $1.06B, with a Y/Y change of ↑173.83%
  4. Net profit margin: 6.38, with a Y/Y change of ↑165.04%
  5. Earnings per share: 0.43, with a Y/Y change of ↑87.07%
  6. EBITDA: $575.00M, with a Y/Y change of ↑271.64%
  7. Cash and short-term investments: $919.00M

ORG: Origin’s Increased Stake in Octopus Energy

In a strategic move, Origin Energy has decided to boost its ownership in Octopus Energy by an additional 3%, bringing its total stake to 23%. This expansion involves a substantial investment of £280 million, approximately $530 million in Australian dollars. Origin initially acquired a 20% stake in Octopus Energy back in May 2020. Since then, all of Origin’s mass market electricity and natural gas customers have received services through Octopus’s Kraken platform.

ORG: Reasons Behind Origin’s Stake Increase

Origin is participating in this funding round alongside other prominent investors in Octopus Energy, such as the Canada Pension Plan Investment Board (CPP Investments) and Generation Investment Management (GIM). The capital raise is happening at a valuation of £5.6 million, marking a significant 60% increase in Octopus’s value since December 2021. Origin’s decision is fueled by Octopus’s impressive growth trajectory, particularly its Kraken platform’s global expansion and licensing.

ORG: Octopus Energy’s Progress and Expansion

Since Origin’s last investment, Octopus Energy has substantially grown its retail customer base. Notably, it has acquired Bulb Energy in the UK (with 2.5 million customer accounts) and Shell Energy’s retail operations in the UK and Germany (adding 2 million energy and broadband customers). Octopus Energy’s organic growth is also noteworthy, having gained 400,000 customers in just six months. Now, it is the UK’s largest electricity retailer and the second-largest energy retailer, with over 11 million customer accounts. Origin attributes Octopus’s success to superior customer service, an efficient operating model, and the Kraken platform’s market dominance.

ORG: The Growing Influence of the Kraken Platform

The Kraken platform, central to Octopus Energy’s operations, has been showing remarkable progress on a global scale. It has recently secured major licensing agreements with Tokyo Gas (a significant shareholder) and the UK’s Severn Trent water utility business. The platform’s reach is expansive, with around 52 million accounts globally contracted to use Kraken. This achievement is a significant step towards meeting its ambitious target of 100 million customers by 2027, demonstrating the platform’s effectiveness and appeal in the energy market.

ORG: CEO’s Remarks

Origin CEO Frank Calabria expressed that Octopus’s performance since the initial investment in 2020 has surpassed expectations and reinforced their confidence in its potential for future growth. He highlighted Octopus’s position as the second-largest energy retailer in the UK, the widespread adoption of the Kraken platform, and the strong global sales pipeline as key factors. Calabria also emphasized Octopus’s rapidly growing virtual power plant, which is connected to over 1GW of assets through the Kraken Flex platform. He affirmed that the increased stake in Octopus aligns with Origin’s vision to lead the energy transition with cleaner energy solutions and innovative customer services, viewing Octopus as a vital channel for future growth.

Conclusion

Origin Energy’s decision to increase its stake in Octopus Energy is a strategic move that aligns with the company’s vision for the future of energy. This investment strengthens Origin’s position in the energy market and signals a commitment to innovation and sustainability in the rapidly evolving global energy landscape. As Octopus continues to grow and diversify, it will be interesting to see how this partnership evolves and what new opportunities it will unlock for both companies to pursue a more sustainable and customer-centric energy future.

 

Are You Looking To Buy The Best Stocks In 2024?

Stay on top of upcoming market trends! Whether you are an SMSF investor or a young investor with your portfolio, we cover a wide range of stocks across all sectors, including mining, financials, industrials, real estate, technology, health and biotech, etc. It will give you an edge to invest and trade ASX listed stocks across large, mid and small caps with an advantage.

Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your free Report instantly for Top 3 Dividend Stocks to buy in 2024!

 

Top 5 ASX Stocks
to Buy for Capital Growth in 2024

Shares In Value - Top 5 ASX Stocks to Buy - Cover 2024
The hardest part to finding growth stocks is having an ability to understand the finer details of these companies from their valuations through to first mover advantage and having key factors on hand to make informed investment decisions.

Our experts take the guesswork out.
ASX insight Stocks Landing

Download Your Free Report

By downloading this report, you agree to our terms and conditions and privacy policy

Scroll to Top

Login

By submitting this form, I agree to the TERMS AND CONDITIONS and PRIVATE POLICY

Income Stocks - Blogs

Please fill in your details to download the free dividend shares report.

By downloading this report, you agree to our terms and conditions and privacy policy

Just 10 Seconds Away From Your Free Report!
Income Stocks - Popup Blog

Please fill in your details to download the free dividend shares report.

By clicking 'Download Report', I accept the Privacy Policy and Member Terms & Conditions.

We will send your report instantly. Please put your correct email address and phone number.