Novalpina Capital and founders buy NSO at $1b co value

Shalev Hulio and Omri Lavie  photo: Eyal Izhar

Francisco Partners has sold the controversial Israeli cyber intelligence company, which it bought in 2014 for $130 million.

US private equity fund Francisco Partners has sold Israeli cyber intelligence company NSO to its Israeli co-founders Shalev Hulio and Omri Lavie, together with members of the company’s senior executive team at an estimated company vaslue of $1 billion. The founders and management team are supported in the acquisition by European private equity firm Novalpina Capital, and financed and advised by Jefferies Group LLC. Hulio and Lavie will invest about $100 million in the acquisition. Francisco Partners acquired NSO in 2014 for just $130 million.

NSO Group develops technology that helps government intelligence and law enforcement agencies prevent and investigate terrorism and crime. The company, which is supervised by Israel's Ministry of Defense has grown rapidly and finished 2018 with revenue of $250 million, and dozens of licensed customers.

In the past NSO has been highly criticized for aiding police forces and government around the world to spy on their citizens. In 2017, the "New York Times" revealed that NSO's spyware was being used by the Mexican government to help repress opponents of the regime. Consequently, Blackstone pulled out of a plan to buy 40% of the company for $400 million. Last Year Verint Systems Inc. (Nasdaq: VRNT) was reportedly in talks to buy NSO for $1 billion.

Last July, there were reports that one of NSO's employees had stolen its Pegasus software and tried to sell it on the dark net.

NSO cofounder and CEO Shalev Hulio said: “This is an important and significant milestone for NSO. I am proud of what the company and our employees have achieved since we were founded in 2010. Together we have built an amazing technology company that is making the world a safer place. As we look forward, we are delighted that Novalpina is joining as our equity partner. Together we can take NSO Group to the next level, launching new cutting-edge products that help our customers reduce the threats from terrorism and crime. I want to thank Francisco Partners for its tremendous support over the past few years. Its guidance has been instrumental to the success of the company.”

NSO chairman and Francisco Partners operating partner Eran Gorev said, “We are very proud of the company’s contribution to the global war against terrorism and crime, and the many thousands of lives that have been saved thanks to the company’s technology. Since our investment in NSO Group, the company has continued to develop its outstanding technological capabilities and has more than quadrupled in size, while implementing a best-in-class business ethics framework and bringing in independent experts to ensure the company was operating in accordance with the highest ethical standards. We would like to thank all the amazing employees of NSO Group for their incredible contribution to the company and to making the world a safer place, and to wish them a highly successful future.”

Novalpina Capital partner Stefan Kowski said, “NSO Group has an impressive management team that has developed best-in-class, proprietary technologies sold to approved governments and intelligence agencies to help tackle terrorism and organised crime. We look forward to supporting NSO’s leadership as they continue to grow the business.”

Published by Globes, Israel business news - en.globes.co.il - on February 14, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shalev Hulio and Omri Lavie  photo: Eyal Izhar
Shalev Hulio and Omri Lavie photo: Eyal Izhar
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