Israeli spyware firm NSO Group, currently facing a massive lawsuit by Facebook in the U.S., is contemplating going public. Among the options the controversial company is mulling is through an initial public offering on the Tel Aviv Stock Exchange and senior officials from NSO have met with TASE’s director.
NSO, which declined to comment on the report, is owned by its founders Shalev Hulio and Omri Lavie, as well as the private equity firm Novalpina Capital, that bought control of the company from Francisco Partners two years ago based on a $1 billion valuation. NSO’s senior management and employees also own stock.
One possible reason the spytech firm is contemplating a public listing is a desire by its investors to see some return on their investment – or perhaps a desire to improve the company’s image by taking it public.
Recently, its chairman, Asher Levy, and its chief financial officer, Doron Arazi, met with the director of Tel Aviv’s stock exchange, Itai Ben Zev. In response to this report, TASE refused to confirm the meeting took place, and said: “The exchange’s management frequently holds meetings with the representatives of many different firms – both private and public – as part of an ongoing and open dialogue.”
Another option NSO may take is by going public through a special purpose acquisition company, or SPAC.
A SPAC is a “blank check” shell corporation that is already public and thus allows companies to go public quickly by merging with it, thus avoiding most of the regulatory hurdles of a traditional initial public offering. In recent years, SPAC’s have raised a massive sum of $83 billion in the U.S. alone and now they are in the market, searching for firms to buy.
The SPAC route may be beneficial for NSO as it will prevent it from making the usual institutional investor “road show” and allow it to close a deal directly with one such shell company. NSO and companies like it, that operate in the somewhat shadowy hacker-for-hire world, have a hard time raising funds, if only due to the negative press they usually enjoy.
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The NSO Group’s surveillance software, known as Pegasus, is designed to break into mobile phones, bypass detection and mask its activity. The malware infiltrates phones to vacuum up personal and location data and surreptitiously control the smartphone’s microphones and cameras.
Facebook is suing the NSO Group in U.S. federal court for allegedly targeting users of its encrypted messaging service WhatsApp with highly sophisticated Pegasus spyware. A coalition of the world’s leading technology corporations, including Microsoft, Google, Cisco, LinkedIn, Github and VMware, have filed an amicus brief backing Facebook.
Facebook is demanding in the suit that NSO be denied access to Facebook’s services and systems and seeks unspecified damages.
The suit was filed in 2019 and is based on a joint investigation by Facebook and Citizen Lab that alleged that Pegasus used a “zero day” loophole in WhatsApp that allowed NSO to hack into the phones of 14,000 users. Citizen Lab also revealed that NSO may have also hacked the phones of dozens of human rights activists across the world.
NSO’s spyware has repeatedly been found deployed to target such people, though the company denies the allegations. Citizen Lab says the targeted phone numbers were in countries including Bahrain, United Arab Emirates and Mexico. Only a few weeks ago, Citizen Lab said that Al-Jazeera journalists were also targeted by NSO.
The suit and IPO speculations comes after a number of recent reports - including in Haaretz - have alleged NSO’s tech was used against activists and journalists. An international investigative journalism collaboration organized by Forbidden Stories called The Cartel Project recently suggested the firm’s technology may have also reached drug cartels in Mexico after it was sold to local police forces. NSO denied the allegations.
Refaella Goichman and the Associated Press contributed to this report.