Nearly a year after it announced the acquisition of significant majority stake in indigenous app store , Walmart-backed payments company has reached an out-of-court settlement with investors in the company blocking the deal.
PhonePe had valued Indus OS at $60 million as part of the deal. The deal was expected to give an exit to early investors in Indus OS including Omidyar Network and Ventureast. Affle Global Pte (AGPL) had also invested in Indus OS in 2020 and held a 25 percent stake in the company.
“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 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,” said the statement issued by PhonePe.
The trouble started when Ventureast Proactive Fund-II (VPF) and AGPL approached Singapore High Court seeking an injunction on the deal. AGPL said that PhonePe had undervalued Indus OS, which it said should be valued at $90 million. While PhonePe bought out 32 percent from other investors, AGPL did not want to sell its stakes to PhonePe at a low valuation.
PhonePe had filed a complaint in Singapore Courts against Affle and venture capital fund Ventureast, both investors in Indus OS, stating that the parties had kept PhonePe in the dark about Ventureast selling its stakes in OSLabs, the parent entity of Indus OS to Affle earlier. PhonePe also filed a complaint against markets regulator SEBI against VPF, calling its practices illegal and unethical.
Founded in 2015 by IIT Bombay alumni Rakesh Deshmukh, Akash Dongre, and Sudhir B, Indus OS offers a local language app store called Indus App Bazaar to its phone brand partners. The app store has a strong user base in Tier 2 and 3 cities and will add to PhonePe’s Switch feature which allows users on the payment app to transfer to their preferred food, grocery or other utility app within PhonePe. Phonepe charges a commission from its app partners for transactions made through Switch.
