July 5 (Reuters) - Britain's Octopus Energy is close to

hiring bankers to oversee a 10-billion-pound ($13.7 billion)

separation and stake sale of its technology arm Kraken

Technologies, Sky News reported on Saturday, citing sources

familiar with the matter.

A minority stake in Kraken of up to 20% is expected to be

sold to external shareholders to help validate the technology

platform's valuation, the report said.

The report added that the demerger, expected within the next

year, would see Octopus Energy's existing investors given shares

in the newly independent Kraken business.

A 10-billion-pound valuation for Kraken implies that the

whole group, including its retail supply business, is worth

around 15 billion pounds or more, the report said, citing a

source.

Octopus Energy declined to comment on the report while

Kraken Technologies could not immediately be reached.

Investment banks have been invited to pitch for the demerger

mandate in recent weeks, Sky News reported.

($1 = 0.7325 pounds)