The Capital Cycle Podcast A Different Network Effect
Nov 26, 2025
Ben Slingsby, a European analyst at Marathon Asset Management, dives into the allure of European power networks, illustrating their status as attractive monopolies. He connects the surge in AI data centers to rising electricity demand and stresses that quality managers often overlook utilities due to perceived risks. Countering these concerns, Ben argues for the stability of regulated returns compared to tech investments. He also discusses the electrification megatrend, notable stock picks like National Grid and Iberdrola, and why now is the ideal time to invest.
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Regulated Grids As A Durable Network Edge
- European power grids are becoming a powerful network effect as electrification and data centres drive structural demand.
- Regulation guarantees attractive returns on capital spending, making grid capex less risky than tech hyperscaler capex.
Capex Looks Similar, But Risk Differs
- Capital intensity in utilities now resembles hyperscalers but with far more predictable returns.
- Private capital and lower rates are pushing up valuations for attractive grid assets.
Prefer Listed Utilities Over Highly Levered Privates
- Avoid equating private, highly leveraged utility ownership with listed operators' balance sheets.
- Prefer listed European grids that have disciplined leverage and have issued equity to fund growth.