The government has invested £25 million in Kraken Technologies in a bid to persuade the fast-growing artificial intelligence company to list in London rather than New York.
The investment, made by the British Business Bank, is the state-owned lender’s largest direct commitment to a single company to date and is part of Kraken’s broader $1 billion funding round ahead of its spin-off from Octopus Energy.
Ministers hope the backing will help anchor the $9 billion AI platform in the UK and support a future IPO on the London Stock Exchange, as concerns grow about the UK’s ability to retain high-growth technology companies.
During a visit to Kraken’s London headquarters, Business Secretary Peter Kyle said the investment was part of a wider £125 million package to help expanding companies grow domestically and go public.
“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 for UK companies looking to go public.”
Kraken is an AI-powered software platform that manages billing and customer services for energy companies. The platform, originally developed by Octopus Energy, has been licensed to several competing providers and now handles billing for around half of all UK households, as well as around 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, giving the company a value of $8.65 billion.
Octopus Energy founder and government adviser Greg Jackson said he would personally prefer Kraken to be listed in London, but recognizes competition from foreign markets.
“The UK must win on performance,” he said. “Having the British Business Bank at the table means they can influence whether a listing ends up in London or New York.”
Jackson said Kraken could be ready to go public as early as 2027, but stressed that there is no set timeline. “It will be when the company is ready,” he said.
The move comes amid heightened scrutiny of Britain’s capital markets following a wave of delistings, aborted IPO plans and companies moving their main listings abroad, particularly to the United States. As there are early signs of recovery in London’s IPO market, ministers are under pressure to show the UK can support companies in the crucial expansion phase.
Alongside the Kraken investment, the government announced two £50m commitments to life sciences and technology funds, including Epidarex Capital and IQ Capital, as part of what Kyle described as “big bets on the sectors where the UK can win”.
The government has also committed £180m to battery research and development as part of a £452m innovation program as part of its industrial strategy and is pushing ahead with plans to reduce regulation, including reviews of health and safety regulations and agricultural technology regulations.
The role of the British Business Bank was expanded following Labour’s spending review and industrial strategy last year. The Sheffield-headquartered bank was founded in 2014 to make it easier for UK businesses to access finance. In June it received £6.6 billion of new capital, bringing 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 grew at home rather than being sold or floated abroad.
“We are the start-up capital of Europe,” he said. “But we’re not yet good enough at scaling and keeping companies here, building here, growing here and expanding here. Too often companies get to a certain size and then move on.”
Ministers say targeted government-backed investment in sectors such as AI, life sciences and advanced batteries will be crucial if the UK is to compete with the strong capital markets of the United States and retain its next generation of global technology champions.
