When it filed for Chapter 11 bankruptcy protection in the US in early June 2001, Internet service provider (ISP) PSINet earned its place in history as the most dramatic casualty of the dot-com era. Analysts had argued that with revenues of nearly $1 billion, PSINet had no fundamental problems in its core ISP business. Rather, its downfall lay in a rampantly ambitious expansion strategy

that pushed the company to debt levels that became unmanageable when the bubble burst.

Since it collapsed, industry watchers have therefore been waiting to see who would go after PSINet assets. In February this year, a rival ISP, Cogent Communications, bought the US infrastructure of the company for a measly $10 million. And in May a rather unusual collection of financiers announced they would be acquiring PSINet’s European assets for €10.5 million.

Given that PSINet Europe’s revenues in 2001 hit €180 million, the consortium certainly struck a hard bargain. Behind the deal were an international group of investors, led by British financier Michael W Stevens. It included Tel Aviv-based holding company, Israel Corporation with interests in chemicals, shipping, oil and energy, advanced technology and communications; ClearBlue Technologies, a data centre operator with 21 facilities in the US and a single facility in London; and technology investment company Infinity Holdings of the UK.

According to the CEO of its telecoms arm, Gilad Shavit, Israel Corporation’s interests are in building “a global portfolio of advanced telecom providers”. In 2001 the group bought Finnish carrier RSLCOM, and believes that PSINet Europe, with operations in 12 countries and more than 600 employees, will give it the pan-European reach it has been seeking.

Another unusual transaction in Europe was concluded in Denmark when Anglo-Dutch IT services giant CMG sold off its entire division there for a paltry EU2 million. In taking on CMG Danmark, UK-based systems integrator ECSoft gains a unit that generated revenues of €7.6 million in 2001 and an operating loss of around €1 million. ECSoft’s own Danish unit contributed 18% of the group’s total revenues in 2001, worth €16.8 million. This deal turns ECSoft into one of the ten largest IT consultancies in Denmark, with approximately 200 employees.