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LONDON-Morley Fund management has acquired a 25% stake in Global Switch, the telehouse business owned by property company Chelsfield. It paid £51.5 million ($82 million) for the stake, and will use it to establish a new indirect vehicle. Morley will be fund manager and Chelsfield asset manager for the new limited partnership, which will specialise in computer facilties across Europe.

As a result, the Global Switch properties in Sydney and Singapore are excluded from the deal, but Chelsfield is looking for other investors to take on those properties. This leaves the fund with six sites: two in London and one each in Paris; Amsterdam; Frankfurt and Madrid together offering 1.4 million sf.

The new fund is taking on £160 million ($256 million) of new debt, to pay off Global Switch’s existing facilities. The deal will net Chelsfield £41 million ($66 million) in cash, showing a paper loss of £16.4 million ($26 million). But more significantly for chairman Elliot Bernerd, it is a neat solution to a problem that has clouded his plans for a management buyout.

Bernerd says: “Ever since we bought out the original shareholders, in what was considered to be a protective measure, we have been working towards creating a properly structured investment vehicle for Global Switch which will also allow for growth in value, as recovery in corporate IT expenditure and outsourcing takes hold.”

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