The government has made a £25 million investment in Kraken Technologies in a bid to persuade the fast-growing artificial intelligence business to list in London rather than New York.
The investment, made by the British Business Bank, is the state lender’s largest direct commitment to a single company to date and forms part of Kraken’s wider $1 billion funding round ahead of its demerger from Octopus Energy.
Ministers hope the backing will help anchor the $9 billion AI platform in the UK and support a future flotation on the London Stock Exchange, amid growing concern about Britain’s ability to retain high-growth technology firms.
Speaking during a visit to Kraken’s London headquarters, business secretary Peter Kyle said the investment formed part of a broader £125 million package designed to help scale-up companies grow and list domestically.
“I want Kraken to be known as a British success,” Kyle said. “I want the London Stock Exchange to be a beacon for global investors as well as British companies looking to go public.”
Kraken is an AI-powered software platform that manages billing and customer services for energy companies. Originally developed by Octopus Energy, the platform has been licensed to several rival suppliers and now handles billing for around half of all UK households, as well as roughly 55 million households worldwide.
Last month, Kraken secured a $1 billion investment from new and existing shareholders as part of its separation from Octopus Energy, valuing the business at $8.65 billion.
Greg Jackson, founder of Octopus Energy and a government adviser, said he would personally prefer to see Kraken list in London, but acknowledged competition from overseas markets.
“The UK has to win it on its merits,” he said. “Having the British Business Bank at the table means it can influence whether a listing ends up in London or New York.”
Jackson said Kraken could be ready to list as early as 2027, but stressed there was no fixed timetable. “It will be about when the company is ready,” he said.
The move comes amid heightened scrutiny of the UK’s capital markets following a wave of de-listings, aborted IPO plans and companies shifting their primary listings overseas, particularly to the United States. While there have been tentative signs of recovery in London’s IPO market, ministers are under pressure to demonstrate that Britain can support companies through the crucial scale-up phase.
Alongside the Kraken investment, the government announced two £50 million commitments to life sciences and technology funds, including Epidarex Capital and IQ Capital, as part of what Kyle described as “big bets on the industries where Britain can win”.
The government has also pledged £180 million for battery research and development through a £452 million innovation programme under its industrial strategy, and is pressing ahead with plans to reduce regulation, including reviews of health and safety and agricultural technology rules.
The role of the British Business Bank has been expanded following Labour’s spending review and industrial strategy last year. The bank, which is headquartered in Sheffield and was established in 2014 to improve access to finance for UK businesses, received £6.6 billion in new capital in June, taking its total financial capacity to £25.6 billion.
Kyle, who took over as business secretary in September, said the aim was to ensure Britain’s most promising companies grow at home rather than being sold or listing overseas.
“We are the start-up capital of Europe,” he said. “But we are not yet good enough at scaling and keeping businesses here, to build here, grow here and expand here. Too often, companies reach a certain size and then move on.”
Ministers say targeted state-backed investment in sectors such as AI, life sciences and advanced batteries will be critical if the UK is to compete with the deep capital markets of the United States and retain its next generation of global technology champions.
