The government is stepping in with a £25m investment to keep AI firms listed in London

The government has made a £25 million investment in Kraken Technologies in a bid to lure the fast-growing intelligence business to list in London rather than New York.

The investment, made by British Business Bank, is the sovereign lender’s largest direct commitment to a single company to date and is part of Kraken’s $1 billion wider funding round ahead of its split from Octopus Energy.

Ministers hope the support will help support the UK’s £9 billion AI platform and support future moves on the London Stock Exchange, amid growing concerns 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 was part of a wider £125 million package designed to help growth companies grow and scale in the country.

“I want Kraken to be known as a British success,” said Kyle. “I want the London Stock Exchange to be a beacon for global investors and British companies that want 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 is licensed to several competing providers and now handles the charging of almost half of all UK households, and around 55 million households worldwide.

Last month, Kraken received a $1 billion investment from new and existing shareholders as part of its split from Octopus Energy, valuing the business at $8.65 billion.

Greg Jackson, founder of Octopus Energy and a government consultant, said he would like to see Kraken list in London, but acknowledged competition from overseas markets.

“The UK should win it on its merits,” he said. “Having the British Business Bank at the table means it can have an impact on whether the list ends up in London or New York.”

Jackson said the Kraken could be ready for deployment as early as 2027, but stressed that no timetable has been set. “It will be when the company is ready,” he said.

The move comes amid intense scrutiny of UK capital markets following a wave of delistings, scrapped IPO plans and companies shifting their primary listings overseas, particularly to the United States. Although there have been signs of recovery in London’s IPO market, ministers are under pressure to show that Britain can support companies through a key expansion phase.

Alongside the Kraken investment, the government has announced two £50 million commitments to health science and technology finance, including Epidarex Capital and IQ Capital, as part of what Kyle described as “big bets on industries where Britain can win”.

The government has also pledged £180 million to battery research and development through a £452 million innovation program under its industrial strategy, and is pushing ahead with deregulation initiatives, including a review of health and safety and agricultural technology laws.

The role of the British Business Bank has been expanded following a review of spending on labor and industrial strategy last year. The bank, which is based in Sheffield and was founded in 2014 to improve access to finance for UK businesses, received £6.6 billion in new capital in June, taking its financial capacity to £25.6 billion.

Kyle, who took over as business secretary in September, said the aim was to ensure promising British companies grew at home rather than being sold or listed overseas.

“We are the first capital in Europe,” he said. “But we’re not ready enough to grow and keep businesses here, to build here, grow here and expand here. A lot of times, 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 essential if the UK is to compete with the deep capital markets of the United States and retain its next generation of global technology champions.