Power demand is rising again. And this time, it is not a short-term cycle.
Ben McVicar, Co-Head of Infrastructure and Portfolio Manager at Magellan, sees a decisive shift underway.
“There’s an upswing in power demand that is data centre related.”
After more than a decade where electricity demand barely moved, data centres are changing the equation. Systems that once operated in a world of flat consumption are now under pressure to expand capacity and fund the next wave of build-out.
That shift matters.
In this Q&A, McVicar explains where he believes the market is misreading the landscape, how supply constraints are shaping investment decisions, and why patience remains a competitive advantage.
What’s your most recent investment and why?
We operate a low-turnover portfolio, but one of the more substantial positions we have entered of late is Cellnex (BME: CLNX). The business is the largest mobile tower company in Europe.
Which investment did you add to your watchlist this week?
We have a universe of about 130-140 companies. It’s a tightly defined list, so not a lot falls in and out often. These are all high-grade infrastructure companies that have met the quality thresholds we require.
So the watch list doesn’t change too much. But things move up and down on our radar. The companies highest on our radar are the mobile phone tower companies like Cellnex, but also its peers across the Atlantic.
What is the most recent investment you have trimmed or sold and what drove this decision?
We have trimmed our position in Italgas (BIT: IG) after a very strong run. This is a gas utility in Italy that is run by a very strong management team. They acquired the second-largest gas network in Italy and expect to create significant synergies from the combined company. But as the price has gone up, the opportunity has narrowed.
What’s your favourite chart or data point from this week?
This shows the levelised cost of energy estimates. There’s an upswing in power demand that is data centre related. This is a change from the 2005-2020 experience, where power demand growth was limited. This is leading to pressure to develop new power capacity.
Gas generation is viable but constrained by supply chain bottlenecks.
This makes renewables the most cost-effective and available source of new power. Combined with national and corporate carbon targets, this explains the ongoing investment we’re seeing in the technologies.
What was your weekly high – a standout market moment or highlight
Vinci (EPA: DG), a French infrastructure and contracting business, went up almost double-digit on its results. This is a long-standing position, and we’ve added to it during dips caused by French political turmoil. It’s good to see the market focused on the robust fundamentals of this business.
What was your weekly low – a market disappointment or challenge?
Customer power prices have gone up as demand has gone up in many regions. In the US utilities, we’re diving into the risks and opportunities that come from the outlook of customer rate affordability and the impacts of an election year in many states.
What first drew you to markets and what continues to keep you inspired today?
I knew I wanted to be an investor before I even started uni. The craft of investing, finding opportunity and building a portfolio to take advantage of these opportunities while managing risk is an endlessly interesting job to be in.
What’s one piece of advice you’d give to new investors?
Be patient, don’t overestimate your abilities and wait for the opportunity that jumps off the page at you. You’ll know it when you see it.
How do you unwind when you’re not thinking about the market?
Why would you do that? But seriously, exercise. I find I need active ‘rest’ to stop me thinking about different opportunities or problems I’m focused on in markets.
Rapid fire!
Favourite investing book?
Snowball by Alice Schroeder.
Favourite investing or finance/markets-related podcast?
I enjoy listening to learn new ideas – the Knowledge Project Podcast (Shane Parish).
The first thing you read each morning?
I check how the portfolio is trading and then get onto the international press (FT, etc.).
Favourite restaurant?
Continental Deli - Newtown.
Something people are surprised to learn about you?
I first started dating my (now) wife when I was 16 and she was 15. I get the impression it's unusual for my generation!
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