Two of Novalpina Capital’s ousted co-founders have been accused in a London lawsuit of a “malign and unpredictable campaign” to take back control of the private equity fund that owns Israeli spyware maker NSO Group.

Stefan Kowski and Bastian Lueken, alongside fellow co-founder Stephen Peel, were stripped of control of Novalpina’s €1bn private equity fund last year in a highly unusual move after investors concluded the trio had fallen out so badly that they were no longer capable of jointly running it.

Berkeley Research Group, the US consultancy that took over the fund, is suing Kowski and Lueken in London’s High Court. It said in court filings that they are in charge of entities that are seeking to “reassert control” over the fund, despite having agreed not to challenge BRG’s appointment and to co-operate with the handover last year. It is not suing Peel.

The pair say they “did not give instructions” for proceedings to be started in a Luxembourg court to put the fund’s original manager, which they ran, back in charge. Lueken said in court filings that BRG’s complaints against him were “groundless”.

The court battle is the latest sign of turmoil at the company that owns a majority stake in NSO and is scrambling to return cash invested by public pension funds from Yorkshire to Oregon.

It threatens to cast further uncertainty over the future of the spyware maker as well as the Novalpina fund’s other companies: Estonian gambling business Olympic Entertainment Group and the French pharmaceutical group Laboratoire XO.

In filings that describe Lueken and Kowski as “people of some means”, BRG said the pair appeared to only want to retake control until money had been paid to entities in their “camp”.

Still, it said, the pair’s actions “pose an existential threat to a fund with €1bn of commitments from investors”. It added that “without swift intervention from the court the fund faces potentially irreparable damage”.

Kowski responded that “the situation is quite the reverse” and said BRG was “mismanaging the fund and causing it to lose value”.

Lueken and Kowski “did their utmost to ensure that the handover [to BRG] was smooth, although their offers of assistance were sometimes rejected or ignored,” Kowski said in court filings for a hearing on Friday.

The pair also argue that their agreements not to challenge BRG are no longer valid because BRG did not uphold its side of the bargain, which was to appoint an independent valuer of the fund so it could hand them payouts.

Though the ousted Novalpina vehicle received a “priority profit share” payment of €18mn in August, just before BRG took control, Kowski said the “most significant” of the payments due to the founding partners had not yet been paid.

He said BRG had “refused, and continues to refuse, to appoint a valuer to carry out a valuation”, which is needed to determine the level of the payouts.

EY valued the fund at €2bn in June 2021, Kowski said.

The case is being heard in London’s High Court and is due to continue next week.



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