Privately held Octopus Energy is reportedly seeking a £1 billion taxpayer-funded loan to hedge supplies, among its conditions for its proposed £100 m takeover of the 1.6 million accounts of collapsed supplier Bulb.
Profit-sharing between Greg Jackson’s group and the government could also form part of a rescue deal, according to media reports at the weekend.
Octopus is the last remaining potential owner for Hayden Wood’s failed Bulb, the largest among 31 collapses caused by suppliers’ inadequate hedging against soaring prices of gas, after it collapsed last November.
Centrica disappointed ministers by fielding no takeover bid before a deadline set by vendors Lazards expired last week. Nor did Masdar, Abu Dhabi-based clean energy developers and investors.
Bulb collapsed into administration in November, after one competitor had attacked the validity of its “all-green” supply credentials. Eighteen months earlier Wood had invited now ousted premier Boris Johnson to open Bulb’s new London headquarters.
Co-founder Wood, formerly a Bain management consultant, continued for eight months as consultant to corporate restructuring firm Teneo, charging them fees reportedly equal to his previous £250,000 salary. Wood quit his role only last month.
Ofgem’s lax licencing of inexperienced management teams was lambasted last week by MPs shadowing the ministry.
Some sector executives believe Bulb is losing as much as £5m every day because of its failure to hedge forward gas purchases.
Recent analysis by the Financial Times estimates Bulb’s failure is on course to cost the government at least £2 billion, making it the largest state bale out since Royal Bank of Scotland’s rescue in 2008.
The Office of Budgetary Responsibility predicted in March that continued volatility in wholesale gas prices could push that sum higher.
Octopus, Britain’s fifth largest energy retailer with over 3 million accounts, is understood to be offering D-BEIS a time-limited profit-share on the deal, in addition to full repayment of the loan. Extensive but unconfirmed reports over the weekend disclosed no further details.
The six year old energy tech providers and renewables generator-retailer has raised in the region of $ 1 Billion from prestige investors in the past few months. While Bulb was floundering in September, Jackson welcomed investment of around £483 million from Al Gore’s Generation investment fund in return for a 13% stake in Octopus.
That partnership deepened last week, with Gore and existing investors managing Canadian public sector pensions pledging a further US $ 550 million towards international and sectoral expansion.
Licencing of Kraken, Octopus’ billing and fulfilment platform managing 25 million customer accounts including those of third parties, and bought out the parent in 2020, is understood to be the group’s key profit driver. Octopus Energy understood to lose money on its domestic energy business.
Octopus group CEO Greg Jackson is pictured with Deepak Ravindran, CTO of its Kraken division.
