Israeli Cyber Firm Founded by Former PM Barak Seeks Wall Street IPO

Paragon, an offensive cyber firm co-founded by former Israeli Prime Minister Ehud Barak and ex-military intelligence officials, is planning to merge with a SPAC (Special Purpose Acquisition Company) to list on the New York Stock Exchange. The company, which was acquired for $900 million two years ago by American private equity firm AE, specializing in defense tech, has merged with AE's subsidiary REDLattice. The combined entity, with Paragon forming the core, aims to expand its business beyond intelligence operations and engage in larger government projects.

Industry estimates suggest the company is seeking a valuation of $1.5 to $2 billion. Goldman Sachs and Jefferies are reportedly advising on the SPAC merger. Paragon currently accounts for 85% of the merged entity's revenue, with the combined companies generating $267 million in the past year, over $200 million of which came from Paragon. The company employs 750 people, with 650 in Israel and the remainder in the U.S., and has seen a 29% annual revenue growth.

Paragon, known for its "Graphite" surveillance software similar to NSO Group's "Pegasus," enables governments to implant spyware on devices to gather intelligence. The company states it only provides services to democratic nations in Western Europe, the U.S., and the Pacific region, and only under judicial order for suspected terrorism or criminal activity. Citizen Lab has previously linked Paragon to operations in countries like Australia, Canada, Cyprus, Denmark, and Singapore. A contract with U.S. Immigration and Customs Enforcement (ICE) has reportedly ended.

Despite facing scrutiny, including a reported halt in services to Italy following a spyware scandal involving journalists, Paragon is said to have met its targets. The U.S. administration's export restrictions on cyber technologies to non-democratic countries have impacted the industry, but Paragon, unlike some competitors, has navigated these regulations. The company has also faced internal criticism, with an investor alleging its aggressive recruitment of ex-military personnel harmed national security and the capabilities of Unit 8200.

The merged entity, REDLattice, is reportedly seeking funding to expand into government projects, including those focused on AI defense and forensic tools, aiming for new or expanded government contracts. This move follows Cellebrite, another Israeli digital forensics firm, becoming an American company.