Israeli prosecutors say they are opening a criminal investigation into the failed start-up of Benny Gantz, Prime Minister Benjamin Netanyahu's challenger, shaking up what has already been a tumultuous election campaign.

In a statement released on Thursday, Israel's justice ministry said Israeli police will conduct the investigation into "Fifth Dimension."

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The statement did not say whether opposition leader Gantz is a suspect.

Gantz's Blue and White Party is in a tight race with Netanyahu's Likud. The March 2 vote comes just two weeks before Netanyahu's corruption trial is to begin.

Gantz denied wrongdoing on Thursday after media reports said an investigation would be launched into an allegedly shady deal between a company he once headed and Israeli police.

Netanyahu was charged last year with bribery, breach of trust and fraud in three cases in which he is accused of receiving lavish gifts from billionaire friends and of exchanging regulatory favours with media moguls for more palatable media coverage of him and his family.

He denies wrongdoing and claims the charges have been trumped up by a hostile justice system, police, and media out to get him.

'Political pressure'

The reports said Gantz is not a suspect in the affair. But the development comes less than two weeks before national elections and during a campaign by Gantz' Blue and White party that has tried to focus attention on Netanyahu's indictment for corruption charges.

"It all sounds like political pressure to get this thing on the public's agenda," Gantz told Israel's Army Radio.

"I am totally at ease. This was checked in the past and no criminal suspicion was found."

Israel goes to the polls on March 2, the third vote in less than a year after two elections in 2019 ended inconclusively, with neither Netanyahu or Gantz able to forge a coalition government.

Pre-election surveys have predicted similar results in next month's vote, potentially extending the deadlock.

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It's not clear if the investigation over the affair will move the needle in any way.

The months leading up to the campaign have been marked by other bombshells, including the unveiling of US President Donald Trump's Middle East plan and the setting of a date for the beginning of Netanyahu's corruption trial, which have not dramatically affected opinion polls.

But it is an embarrassment for Gantz, a former military chief, who has made ousting Netanyahu his main message and has tried to present a squeaky clean image in the face of the long-serving leader's graft charges.

After retiring from the army, Gantz headed the Fifth Dimension, a cybersecurity company that entered talks with Israeli police over the sale of its product.

According to Israel's state comptroller, a governmental watchdog, the police may have violated acquisition laws by forgoing a tender in its dealings with the company.

Israel's justice ministry said documents from the state comptroller were being looked into.