U.S. Venture Capital Firm in Talks to Buy Israel's Infamous Spyware Maker NSO

Sagi Cohen
Sagi Cohen
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NSO offices in southern Israel, last year.
NSO offices in southern Israel, last year.Credit: Sebastian Scheiner/AP
Sagi Cohen
Sagi Cohen

Israeli spyware firm NSO is negotiating to sell control of the company to the Integrity Partners venture capital firm in the United States, in the aftermath of its blacklisting by the U.S.

The Israeli company's CEO Shalev Hulio has joined forces with U.S. investment bank Moelis and with a local law firm in order to identify an investor to help with the rehabilitation effort of the company. Two investors have expressed interest, and Haaretz has learned that negotiations with Integrity are in their advanced stages, which include a detailed letter of intentions. It is unclear if and when the deal would be completed.

Integrity Partners, which according to its website deals with investments in the fields of mobility and digital infrastructure, is managed by partners Chris Gaertner, Elad Yoran, Pat Wilkinson and Thomas Morgan.

According to the document of intentions, they will establish a company called Integrity Labs that would acquire control of NSO. It would also stream $300 million to the firm, in order to rebuild the company.

The plan outlines canceling or restricting most of the company's former clients, effectively bringing the company’s revenues to zero. Instead of the current 37 clients, the company will reduce its sales to only five clients: the Five Eyes Anglosphere intelligence alliance of New Zealand, the United States, Australia, Great Britain and Canada. The company would initially focus on defensive cyber products as part of its rebranding effort.

During that time, Integrity promises to lobby the U.S. administration to remove NSO from the blacklist, and to deal with the pressure and lawsuits from Apple, Meta, Google, Microsoft, Citizen Lab, Amnesty and others. At the same time they will continue to develop Pegasus spyware

Integrity's partners are former American soldiers with close ties to U.S. administration officials, contacts they believe could be used to develop partnerships and identify new clients in the United States.

A court approved on Tuesday the appointment of a temporary trustee for three companies from the NSO group, which claim that they deal with defensive rather than offensive cyber tools, and maintain that they won’t be able to pay wages to their employees beginning in February.

The companies claim that Hulio is not working for their benefit and is attaching them to the companies on the U.S. blacklist in order to enable the sale of the group as a whole. The management claims that there is already an investor who is interested in acquiring NSO, and they are afraid that separating the companies will hurt the transaction.

NSO responded: “The report about the contacts for acquiring control of NSO is full of tendentious inaccuracies and half-truths. A number of U.S. venture capital firms are very interested, and we are conducting contacts with all of them. Any other report is incorrect.”

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