(Bloomberg) — Two of the ousted founders of a private-equity fund that owns Israeli spyware maker NSO Group are locked in a London court battle over what NSO is worth.
Stefan Kowski and Bastian Lueken, who helped found Novalpina Capital Partners, were accused in a London suit of running “an aggressive campaign” to challenge the new controller of the fund, Berkeley Research Group. The pair’s conduct in Luxembourg “represents an existential threat” to the fund said BRG.
Lawyers for Kowski and Lueken said the current litigation was nothing but a “tactical maneuver” to hold up the Luxembourg proceedings and ultimately to deny them payouts linked to NSO’s valuation. The founders were removed by the fund’s investors in the summer of 2021 and BRG appointed in their place.
Novalpina has been in turmoil since the founders’ falling out last year. Meanwhile, the firm faced heightened scrutiny following revelations that NSO’s Pegasus technology was used to eavesdrop on conversations and track messages of journalists and activists. NSO said its product was sold to law enforcement and intelligence agencies of vetted governments only.
The litigation both in London and Luxembourg threatens the ongoing viability of Novalpina and its “distressed” portfolio companies, BRG said. Lawyers for Kowski said the fund was independently valued at around 2.1 billion euros ($2.32 billion) in June 2021. Kowski said BRG has been “mismanaging the fund and causing it to lose value.”
Part of the fight stems from the question of a valuation of NSO itself. Lawyers for Kowski allege that BRG reneged on a commitment to get the Israeli company fairly valued. According to emails disclosed in Kowski’s filing, BRG responded to say that with NSO shutting down Pegasus, it was therefore “unfeasible (and was always unworkable)” to conduct an independent valuation
Kowski told the court in a filing that neither he nor Lueken gave “instructions” for the Luxembourg proceedings that are challenging BRG’s role. Rather the pair sought to help the handover of the fund “although their offers of assistance were sometimes rejected or ignored.”
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