PhonePe, Affle settle ‘out of court’ in Indus OS acquisition case

The long-standing legal wrangle between digital payments player PhonePe and IndusOS shareholders Affle and Ventureast Fund has finally come to a close with all parties opting for an out-of-court settlement.

In a joint statement, the four parties said, “PhonePe, Indus OS, Affle Global Pte Ltd (ATPL) and Ventureast Proactive Fund-II (VPF) have released a joint statement stating that the settlement of the dispute involving VPF shares in IndusOS is a significant step towards a greater outcome for Indus OS and its stakeholders. The joining of many important forces (Indus OS Founders, PhonePe, Samsung and AGPL) would anchor Indus OS in the next part of its value creation journey.”

The court tussle began when PhonePe was close to acquiring IndusOS in May 2021. The acquisition was set to take place at a valuation of $60 million.

However, Affle which is the largest shareholder in IndusOS, took objection to the deal and filed an injunction at Singapore International Arbitration Center (SIAC) against PhonePe, saying it has the Right of First Refusal (RoRF). As per Affle, the true valuation of IndusOS stood at $90 million and it was unwilling to sell its majority stake at a lower valuation. PhonePe too filed a case against Affle and Ventureast at the SIAC.

Indus OS, founded by Akash Dongre, Rakesh Deshmukh, and Sudhir Bangarambandi, has raised about $20 million so far from Samsung Ventures, Omidyar Network and Snapdeal founders Kunal Bahl and Rohit Bansal among others.

The statement by the four parties further read, “The strategic confluence of parties and the long-term alignment could not have been accomplished without the initial strife, and the subsequent maturity of vision and leadership by all parties. Different parties have played supporting roles in the Indus OS journey. Ventureast played a key role in the initial stages of bringing in angel investors and VC investors even before they were an investor, and subsequently was the investor who backed Indus OS in maximum number of rounds. AGPL has delivered strategic value creation and sustainable growth.”

In June last year, PhonePe had also filed a complaint with the Securities and Exchange Board of India (SEBI) against Ventureast Proactive Fund-II (VPF). PhonePe had said that the complaint relates to multiple violations of SEBI’s code of conduct in relation to VPF’s recent side dealings with Affle, which it claims are a deliberate bad faith attempt to scuttle PhonePe’s acquisition of OSLabs, which is the Singapore-based holding company of Indus OS.

While PhonePe already holds over 32 percent in Indus OS, Affle owns over 20 percent.

The battle further intensified when Affle claimed that it has won the legal battle against PhonePe at the Singapore Court, a claim that was refuted by both PhonePe and IndusOS.

PhonePe, which is a leader in the Unified Payments Interface (UPI), had plans for IndusOS to work with PhonePe’s Switch — a service which enables multiple apps such as Ola, redBus, Goibibo, Myntra, Delhi Metro, and Grofers on a single platform.

PhonePe’s interest in Indus OS comes from the distribution play since Indus OS has over 100 million users and over 4 lakh apps on its own app marketplace called App Bazaar. Indus OS has partnered with 12 mobile brands in India and powers Samsung’s default app store – Galaxy Store.

Indus OS’ App Bazaar has over four lakh apps available in 12 Indian languages, and the platform has seen over a billion app installs since 2019. PhonePe itself runs its own ‘super app’ platform Switch to offer users access to popular consumer internet apps on its platform. Moneycontrol