Sky News has learnt that Octopus Energy, which has amassed about 1.5 million customers since launching just over three years ago, has been in detailed negotiations about the sale of a large stake to Origin Energy, a Sydney-listed group.
Energy industry sources said the discussions were ongoing as recently as this month, although it was unclear whether the coronavirus outbreak was hampering the ability to conclude a transaction.
In Sydney on Monday, Origin's shares fell almost 10% as the global slump in equities continues.
The Australian company's shares have almost halved in the last 12 months, giving it a market value of AUS$7.43bn (£3.7bn).
It was also unclear whether Octopus was in discussions with any other third parties about a stake sale.
Origin and Octopus both declined to comment.
If the talks do proceed to a formal deal, it is likely to crystallise a valuation of at least £1bn for Octopus, which has now established itself as a top 10 gas and electricity supplier in the UK.
Greg Jackson, Octopus Energy's chief executive, told The Times earlier this year that he had bold ambitions for the company.
"We've got to get to five to six million customers in the UK over the next three or four years," he says.
Mr Jackson wants to reach 100 million customers globally by 2027, he told the newspaper.
Octopus owns Kraken Technologies, an IT platform that has become the envy of the energy industry because of its cost-efficiency.
On Monday, Octopus announced that it had struck a deal with Germany's E.ON to use the Kraken technology to serve npower and then E.ON UK customers.
The challenger's rapid growth has come at a time when many other suppliers - both large and small - have struggled to make money in a market now defined by the price cap introduced last year.
Roughly 20 smaller suppliers have gone bust, while a number of others - including France's Engie and Sweden's Vattenfall - have pulled out of the market by selling their operations.
Last year, Ovo Energy, another relative newcomer, catapulted itself into the ranks of the industry's giants by buying the residential energy business of SSE.
By contrast, Centrica, the owner of British Gas, has seen its share price slump, and last week parted company with its chairman, who resigned for health reasons, and chief executive.