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Bengaluru, April 14
PhonePe, Indus OS, Affle Global and Ventureast Proactive Fund II have opted for an out-of-court settlement in the case surrounding the acquisition of Indus OS by PhonePe.
PhonePe has been in talks to acquire the content and app discovery platform (registered name - OSLabs) for $60 million since May 2021. However, the deal was not completed on account of the objection raised by existing investors, Affle Global and Ventureast.
The existing investors had valued Indus OS at $90 million, while PhonePe had offered $60 million to acquire about 90 per cent stake. Since then the deal has been in a legal tussle.
In a joint statement on April 13 evening, PhonePe, IndusOS, Affle Global and Ventureast Proactive Fund II (VPF) said, “the settlement of the dispute involving VPF shares in Indus OS 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.”
None of the parties disclosed the specifics of the settlement. However, a source aware of the development told BusinessLine, “the joint statement is a signal that the dispute has been resolved and PhonePe will go ahead with the original plan to acquire a majority stake in IndusOS.”
The joint statement also noted that a 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.”
In June 2021, PhonePe had filed a complaint against Ventureast Proactive Fund-II (VPF) with the Securities and Exchange Board of India (SEBI). The complaint noted that VPF violated SEBI’s code of conduct by doing side dealings with Affle, which could negatively impact PhonePe’s acquisition of Indus OS. The complaint has now been disposed of by SEBI. The regulator observed that the complaint is not an investor complaint and is in the nature of a private dispute. It said private disputes relating to financial transactions cannot be adjudicated on the SCORES (SEBI complaints redress system) platform.
PhonePe, Indus OS synergies
Indus OS has built Indus App Bazaar, which has a portfolio of 4 lakh localised Indian apps, making it an Indian alternative to platforms like Google PlayStore and AppStore. PhonePe is looking to integrate the Indus App Bazaar in PhonePe Switch, which hosts m-sites (mobile sites) for a variety of apps including Myntra, Zivame, Grofers and Netmeds.
The Indus OS acquisition can potentially strengthen the super app ambitions of PhonePe, which has expanded into a majority of verticals encompassing all things money. It allows users to send and receive money, recharge mobiles, DTH, data cards, pay at stores, make utility payments, buy gold and make investments. PhonePe forayed into financial services in 2017 with the launch of Gold, which enabled users to buy 24-karat gold on its platform.
Since then, the company has launched several mutual funds and insurance products, including tax-saving funds, liquid funds, international travel insurance, and Corona Care, a dedicated insurance product for the Covid-19 pandemic, among others. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps from within the PhonePe mobile app. Earlier this week, PhonePe announced that it has processed more than 100 million transactions in a single day.
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