Dutch Government Takes Priority Stake in Fox Crypto

Parent company NCC Group's sale of Fox Crypto to Sweden's CR Group Nordic was completed last 28 March. The deal was announced August 1 last year. Minister Ruben Brekelmans informs in a parliamentary letter that on 28 March, the central government took a so-called priority stake in Fox Crypto through Invest-NL. This is to safeguard national security interests.

Fox Crypto is a Netherlands-based company that develops and manufactures cryptographic products for, among others, the Dutch state. These are products that encrypt and keep state secrets safe, among other things. Within the government, Defence is the largest customer.

In 2015, Fox Crypto became owned by UK-based NCC Group through the acquisition of Fox Crypto's parent company, Fox IT Group. NCC announced in April last year that it wanted to sell the crypto branch because it wanted to focus solely on growing its cybersecurity services, Because Fox Crypto's products and services are of strategic importance to the government, the sale process was closely monitored by the Ministry of Defence, in coordination with the Ministries of EZ and BZK for that reason. For instance, EZ noted that the Security Test Investment, Mergers and Acquisitions Act (Vifo Act) was complied with in this transaction.

Securing interests.

Minister Brekelmans writes in the parliamentary letter that it was finally decided to take a priority stake in Fox Crypto. According to Brekelmans, having a national development and production capacity in the field of so-called high assurance technology is crucial for the digital autonomy and resilience of the Netherlands. This ambition is also part of the National Crypto Strategy (NCS) implemented by the chief information officer (BZK).

After discussions with the new owner, the Swedish CR Group, about safeguarding the Dutch interests in Fox Crypto, a combination of measures was taken: a tightening of the contractual agreements, the establishment of a supervisory board including a member to be appointed by Invest-NL, and a position of this state investment company as priority shareholder. One of Invest-NL's legal duties is to hold a holding at the request of the Dutch government if it involves a substantial economic interest for the state.

As the holder of the priority share, Invest-NL has certain rights that ensure decisions in the management of the company do not adversely affect Dutch interests, as well as that national development and production capacity remain guaranteed. A new strategic collaboration agreement has also been concluded for the cooperation and development of high-assurance crypto products.

On how big the share is and what it has cost, the minister does not comment. However, an explanation does state that the financial implications are "limited and covered by the Defence budget".

Source (in Dutch): Computable