Octopus Investments CIO Jonathan Digges is clearly no stranger to an organisational chart. Five minutes into a meeting with New Private Markets, he jumps up, takes to the whiteboard and begins illustrating the many tentacles that make up the firm’s various strategies and business units.

The firm’s story is an unusual one. It was founded in 2000 to provide products to retail investors looking to invest in tax-advantaged areas, and now manages £8 billion (€9.35 billion; $10.2 billion) of individuals’ capital across venture capital trusts, enterprise investment schemes and inheritance tax services.

More recently, the firm has been growing its offering to institutional investors. It focuses on four verticals, all with a sustainability bent: real estate, renewable energy, venture capital and sustainable infrastructure. Within each area there is a family of funds that range from the sub £100 million to £1 billion plus.

Source: Octopus Energy

For the last decade, however, the Octopus brand has been more readily associated with domestic energy supply than fund management. Renewable energy business Octopus Energy was launched in 2015 and operates technology, renewable energy generation and energy retail; residents of the UK may recognise the bright pink livery of its fleet of service vehicles. It has become one of the most recognised utilities brands in the UK market, and recently completed an $800 million funding round that valued the business at $7.8 billion.

Octopus Investments is part of Octopus Group, as is Octopus Energy. There is also UK property investor Octopus Real Estate, and Aurora Schools, a network of UK special needs and disability schools, colleges and care homes. A new business, Octopus Money, was launched last year to provide financial advice to individuals. Octopus Energy now operates as a freestanding company of which Octopus Group owns less that 50 percent.

Digges is well aware that, though the prominence of the energy business has brought the firm benefits, it also brings responsibility. “We have a very powerful consumer brand in the market, and we have to protect that. The worst thing in the world for us is something going disastrously wrong on an affordable housing site,” he tells New Private Markets.

Institutional intentions

Products aimed at institutional investors comprise just £5 billion of the firm’s £13.5 billion AUM, but the plan is for this to increase dramatically over the next decade. The firm’s “big, hairy, ambitious goal”, Digges says, is to hit £50 billion by the end of that time frame.

Explaining the decision, Digges notes that, while the firm has had “good inflows” from its retail business, the firm has likely “reached our peak” in terms of the tax advantaged market.

“If we want to continue growing our business, we need capital from different sources,” he says.

To some extent, Octopus’s plan runs counter to the general trend among private markets firms. The democratisation of alternatives investing is a well-documented phenomenon, with many firms – including those with a sustainability focus – launching new products in an attempt to tap into the retail market.

Digges expects the firm to stay focused on its sectors of expertise: “We will in all likelihood remain specialist. We do renewables, real estate, sustainable infrastructure, smaller companies. [If] we’re having this conversation in a year or two’s time, I’m not sure there will be any change in that.”

However, the firm is looking at new sub themes that might fit into its existing verticals. Natural capital is an area it has been “spending a lot of time talking about” in relation to its real estate business, in part because it remains an underdeveloped part of the market.

“There’s an awful lot of people that don’t really know how they want to do it… The reason we’re spending so much time focusing on it is that’s kind of what we do. We get into new things and try and find a way to make them investable,” Digges explains.

Success in this area will be in large part down to investment track record. The affordable housing and sustainable infrastructure strategies are recently launched, meaning that the firm does not have performance data to share. However, Octopus Healthcare Fund – the firm’s “flagship fund” as Digges puts it – has provided a total return over a five-year period of 8.11 percent by investing in UK care homes, according to the firm.


In the short term, Octopus is focused on fundraising for three strategies: an open-end affordable housing fund, which launched in 2023 and has so far raised £60 million; a sustainable infrastructure strategy, which debuted a year earlier with a cornerstone commitment of up to £100 million from the UK Infrastructure Bank; and Octopus Healthcare Fund, which has raised £1.4 billion and owns 101 care homes.

Octopus has established relationships with LPs in a number of regions; the challenge now is to deepen those relationships, says. Digges: “In the UK the scale we think will come from Local Government Pension Schemes. Defined benefit schemes are not very interested in what we have to offer. We have DB schemes in there historically, but they’re not doing new allocations […] The other big markets for us today are pension funds and insurance companies in Korea and Japan. We have a business in Australia, so we’ve got investors from the Australian Super funds into our Australian business. But actually we’d like to try and convert them to some of our European funds.”

Digges is only too aware that Octopus is a small fish in a big pond – the firm’s entire assets under management is scarcely larger than Brookfield’s first Global Transition Fund – but he remains confident that it can find a foothold in an increasingly crowded market. “When you’re investing in any of these asset classes, you’ve got to remember there are people who are taking the money at the end of it, and a number of them are quite sensitive.

“I think our reputation, our ownership structure, our overall mission, our B Corp status, the fact that I think we would see ourselves as slightly different to some of the bigger, bluer chip, more established competitors for the right group of investors and the right group of counter parties, that matters and is a key point of distinction.”

Editor’s note: This article has been updated to reflect that Aurora Schools is not managed by Octopus Real Estate, and is a separate business within Octopus Group.