The buyout firm behind the Pegasus surveillance technology which last week triggered a global outcry over its use is to be dissolved after its partners failed to resolve a bitter months-long dispute.

Sky News has learnt that London-based Novalpina Capital is to be removed as the manager of its fund, with the management of its assets instead taken over by a third party.

The development, which has yet to be made public, is expected to be formalised through a further vote among Novalpina's fund investors - or limited partners (LPs) - during the first half of August, according to City sources.

It will represent a further twist in the escalating scandal over the activities of NSO, whose spyware - branded Pegasus - has been used to infect the mobile devices of targets to extract messages and record calls.

... The winding-up of Novalpina is not directly connected to the NSO scandal, but will raise questions about the future ownership and management of such a controversial business.

The process to remove Novalpina as the manager of the fund is expected to take several months at least, according to insiders.

Any eventual attempt to sell Novalpina's NSO stake is likely to prove fiendishly complicated given the recent revelations, they added.

... Novalpina could not be reached for comment on Tuesday.