Why has @UKLabour decided to put £25m of public money into Kraken, the software arm of @OctopusEnergy? Kraken is apparently planning an IPO. It's a big company, serving 70 million customers accounts across 4 continents. Hardly in need of a bailout. Or innovation funding. So why is public money being spent on what can only be a tiny stake - the company has been valued at c £1bn The more interesting context is Octopus Energy itself Octopus needs the proceeds from selling Kraken because it appears to be materially short of its regulatory capital requirement. Based on current customer numbers, that requirement is close to £1.5bn. We only have balance sheet data to April 2025 so we don't know the current asset position but it's likely short by a significant amount, in part because a big chunk of its assets are intangibles that don't count towards the regulatory capital Octopus swung back into losses last year. After profits in 2023 (£203m) and 2024 (£83m), it made a £255m loss in 2025. The company blames warm spring weather, but the accounts show a big increase in admin costs, which have little to do with the weather Selling Kraken converts intangible assets into cash that can be counted as regulatory capital. That neatly solves a capital problem. What happens to the rest of the proceeds will matter a lot If, after shoring up the balance sheet, the remaining cash is paid out as dividends, it raises an obvious question: will shareholders still recapitalise the supply business if losses continue now that the valuable software arm has been sold? This matters because Octopus is now the largest supplier in the GB market. If it failed, it would make the Bulb collapse look like a picnic. Only @centricaplc would have the balance sheet to absorb it - ironic, given Centrica was effectively excluded from the Bulb takeover in favour of Octopus Centrica CEO Chris O’Shea has repeatedly warned about Octopus’s finances. I agree. At the time of the Bulb acquisition I did a deep dive: until 2023, Octopus had never made a profit and survived only because shareholders kept injecting capital There’s also an awkward governance angle. Greg Jackson, CEO of Octopus sits on the Cabinet Office board and the Industrial Strategy Advisory Council. That doesn’t imply wrongdoing, but it does mean the state is buying equity in a business being sold by a government adviser, while his other business appears to be struggling to meet regulatory obligations @unherd asked me to focus on the Kraken stake, but I’ll be digging into the 2025 accounts in more detail in a blog shortly, because there’s more going on here than a £25m “UK champion” story @Ed_Miliband @ClaireCoutinho @AndrewBowie_MP @NJ_Timothy @DavidGHFrost @mattwridley @cmackinlay @ofgem @energygovuk @EdConwaySky @Iromg @AllisonPearson @MerrynSW @mattotele @jonathan_leake unherd.com/newsroom/why-is-t…