The Globes financial daily said that as part of the potential IPO process, NSO chairman Asher Levy and chief financial officer Doron Arazi met earlier this week with Itai Ben-Zeev, the chief executive of the Tel Aviv Stock Exchange.

NSO declined to comment and a TASE spokeswoman said the bourse does not discuss its meetings.

Globes cited market sources as estimating the company could be valued at $2 billion in an IPO, with proceeds likely to be used to develop new activities such as intercepting drones.

The Haaretz daily said another option NSO might take was to go public through a special purpose acquisition company, or SPAC - a shell corporation that is already public and allows companies to go public quickly by merging with it. That avoids most of the regulatory hurdles of a traditional IPO.

NSO, which is being sued by a group of U.S tech firms including Facebook, is one of the world's better known suppliers of mobile surveillance tools to governments and law enforcement agencies.

It is known in the cybersecurity world for its "Pegasus" software and other tools that can be delivered in several ways.

The software can capture everything on a phone, including the plain text of encrypted messages, and commandeer it to record audio. But the company has been criticised by online privacy activists who have accused it of creating spyware used to target rights groups and reporters around the world.

NSO, owned by London-based private equity firm Novalpina Capital, has said it only sells its technology to state and law enforcement agencies "to help them fight terrorism and serious crime".

(Reporting by Steven Scheer. Editing by Mark Potter)