The move values the existing Global Switch at euro495 million, and as part of the deal Risanamento will invest euro280 million of new capital in the business. This will be financed by the sale of Risanamento's existing property portfolio.Cheslfield Chairman Elliot Bernerd said: 'It is clear that the near term demand for telehousing and colocation services is showing less growth than was predicted some fourteen months ago when Chelsfield and TrizecHahn made their initial investment into Global Switch. There is a real sense of flux and what may prove to be important structural changes to the customer base.'

Bernerd said that banks had become nervous about lending to finance Telehouse construction. This was, in turn, beginning to restrict the supply of new space and market rents are already showing signs of hardening. For this reason he said the injection of euro280 million of new capital into the business would give it a competitive advantage during the expected colocation market shake-out.