'Golden shares' tactic to prevent Kraken swimming for US shores

The government's stake in Octopus’s software arm is part of efforts to curb New York listings, writes Jeevan Vasagar

- Jeevan Vasagar

Last week the UK government took a leaf from the business rulebook of Donald Trump.

The unprecedented decision by the British Business Bank (BBB) to invest £25m in Kraken, the software arm of Octopus Energy, looks strikingly similar to the Trump administration taking "golden shares" in five US public firms, including Intel and US Steel.

For Trump, it’s about exhibiting strength, part of a series of remarkably un-capitalist interventions, including banning share buybacks for defence companies. But for the UK, it betrays a weakness.

Amid anxiety that homegrown UK success stories are listing overseas, the business secretary, Peter Kyle, told the Financial Times that the investment — amounting to a publicly financed 0.35% stake in the £6.45bn company — is "not a bung". He did acknowledge, however, that it was part of efforts to keep Kraken in the UK. The founder of Octopus, Greg Jackson, has said it was a "coin toss" as to whether Kraken listed in London or New York.

For British companies, the lure of listing in the US is partly down to the higher valuations on offer. But this doesn't guarantee results.