Ares Management is to return control of a French drugmaker it seized from the struggling billion-euro private equity fund that owns spyware maker NSO Group, paving the way for a sale that could make money for investors.
The US private markets giant has reached a “mutually acceptable resolution” on XO Lab with Berkeley Research Group, the US consultancy in charge of the billion-euro fund, the pair told the Financial Times.
This ends some of the turmoil surrounding the fund, which was raised by now-defunct buyout group Novalpina Capital and bought LXO in 2020.
Ares took over LXO in May after refusing to extend a change-in-control waiver over a €100 million loan he made to the company through his credit business. This debt will be repaid with interest under the agreement.
The fund has been embroiled in multiple legal cases since a bitter dispute between Novalpina co-founders Stephen Peel, Stefan Kowski and Bastian Lueken led investors to eject the trio last year. They gave BRG the mandate to liquidate the fund and return their money.
LXO was the crown jewel of the Novalpina fund and its seizure was a blow to BRG. The fund owns two other companies: NSO Group, which faces lawsuits from Meta and Apple and has been blacklisted by the United States for its Pegasus hacking tool, and Olympic Entertainment Group, a casino company from Eastern Europe.
The deal paves the way for BRG to sell the pharmaceutical company, which makes the hypertension drug Loxen. Stanley Capital Partners, a private equity firm that counts British Olympic rower Simon Cottle among its founding partners, has expressed interest in buying it, three people with knowledge of the matter said.
Cottle is a friend of Stephen Peel, one of Novalpina’s ousted co-founders, three people close to the men said, although it was unclear whether they had spoken about the deal.
BRG won injunctions against Ares in the UK and Luxembourg courts after Ares took control of LXO last month. The UK injunction temporarily prevented Ares from selling his shares in LXO.
Key taking can be a last resort for direct lenders because, unless negotiated with the agreement of an owner who no longer wants to be involved, it sometimes opens the risk of litigation and threatens to hinder relationships with large institutions that private capital groups seek to tap funds.
In a joint statement, BRG and Ares – which was LXO’s sole lender – said the settlement was “a positive outcome for the company and all other parties involved”.