Business

Novalpina founders accused of ‘malicious’ attempt to win back €1bn fund

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

It was Stefan Kowski and Bastian Lueken, along with co-founder Stephen Peel out of control of Novalpina’s €1 billion 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 able to support him to lead together.

Berkeley Research Group, the US consultancy that acquired the fund, is taking Kowski and Lueken to the High Court in London. Court filings say they are responsible for companies trying to “take back” control of the fund, despite agreeing not to contest BRG’s appointment and cooperating with the handover last year. It’s not suing Peel.

The two say they have given “no instructions” for a case to be brought before a Luxembourg court to reinstate the original manager of the fund they ran. Lueken said in court filings that BRG’s complaints against him were “unfounded.”

The court battle is the latest sign of turmoil at the company, which owns a majority stake in NSO and is scrambling to repay money 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 other companies in Novalpina’s fund: Estonian gaming company Olympic Entertainment Group and French pharmaceuticals group Laboratoire XO.

In filings describing Lueken and Kowski as “people of some means,” BRG said the pair appeared to just want to regain control until money was paid to companies in their “camp.”

Still, it said, the couple’s actions “pose an existential threat to a fund that has committed $1 billion from investors.” It added that “without prompt court intervention, the fund faces potentially irreparable damage.”

Kowski responded that “the situation is exactly the opposite,” saying that BRG “mismanages the fund and is causing it to lose value.”

Lueken and Kowski “did everything to ensure the handover [to BRG] has been smooth, though at times her offers of help were refused or ignored,” Kowski said in court filings for a Friday hearing.

The two also argue that their agreements not to challenge BRG are no longer valid because BRG failed to honor its side of the deal, which was to appoint an independent assessor of the fund so he could make payouts to them.

Although the displaced Novalpina vehicle received a €18 million “priority profit share” in August, just before BRG took control, Kowski said the “most significant” of the payments to the founding partners had yet to be made.

He said BRG “has refused and continues to refuse to hire an appraiser to conduct an assessment” needed to determine the size of the payouts.

EY valued the fund at EUR 2 billion in June 2021, said Kowski.

The case is being heard in the High Court in London and is set to continue next week.

https://www.ft.com/content/5e4fd205-ce8e-4e5e-aa8c-7f4ce9873117 Novalpina founders accused of ‘malicious’ attempt to win back €1bn fund

Adam Bradshaw

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