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PhonePe settles dispute with Affle Global, acquires OSLabs to build super app

Digital payments platform PhonePe on Friday announced the acquisition of OSLabs, a Singapore-based holding company of app and content discovery platform IndusOS, after reaching an “amicable settlement” with the company’s majority shareholder Affle Global Pte Ltd (AGPL).

In a statement released on Friday, PhonePe said it is acquiring Affle Global’s entire stake in OSLabs at a premium.

The long-pending settlement comes after a year-long saga between Walmart-owned PhonePe and Affle Global after the former announced in May 2021 that it was in the final stages to acquire a 92% stake in OSLabs in a $60 million deal. Since then, both parties were at odds with each other and took the matter to the court. 

The battle 

Affle Global, the majority stakeholder in IndusOS, had contended the deal saying that it valued the startup at $90 million, whereas PhonePe is said to have acquired over 90% of OSLabs for $60 million. Affle had estimated that IndusOS’ valuation was at around $90 million, and had refused to sell its 25% stake at a lower valuation.

It had filed an arbitration case against IndusOS in a Singaporean court, claiming it had the right of first refusal (ROFR) on the sale of the startup, and its founder’s shares to PhonePe. 

Later (on May 31, 2021), the court ruled in AGPL’s favour, ordering that resolutions related to PhonePe transactions be invalidated, and placed an injunction on any further transfer of shares to PhonePe and voting restrictions related orders.

However, PhonePe came out with a media statement in June 2021, refuting the claims and saying that no final ruling had come forth. It claimed that Affle has signed the term sheet but later raised objections to sabotage the deal. 

It further took the matter against early-stage venture fund Ventureast (another IndusOS investor) and Affle Global to SEBI (Securities Exchange Board of India), where it claimed that the former acted in bad faith and “deliberately” did “side dealings” with Affle to sabotage PhonePe’s acquisition of IndusOS. It even filed a lawsuit against both the investors in Singapore.

The IndusOS team.

Super app dreams 

The acquisition is expected to help PhonePe in its “super app and vernacular language” strategy. According to the statement released by PhonePe on Friday, “the closure of the deal gives PhonePe to pursue its stated vision of building a homegrown horizontal, local Appstore, while AGPL gets a premium on its original investment”. 

Founded by IITians Rakesh Deshmukh, Akash Dongre, and Sudhir B in 2015, IndusOS is a leading app-content-discovery platform that helps smartphone users consume apps and content in the language of their choice. The company operates a full-fledged Android app store, known as Indus App Bazaar. It is backed by the venture capital arm of smartphone maker Samsung.

The deal is expected to help PhonePe compete better with players such as Paytm, Google Pay, and Amazon Pay, which are also building similar capabilities. It is expected to give PhonePe access to Indus OS’ over 100 million users and 400,000 apps across all categories in 13 languages. 

This would particularly help PhonePe’s Switch platform which allows customers to switch between PhonePe and their preferred apps across categories within the PhonePe app itself.

“We are very excited to embark on this journey with OSLabs, and build just the kind of the localised App store that India needs,” said Sameer Nigam, Founder and CEO at PhonePe. 

Mei Theng Leong, Director of AGPL, added, ”We are happy that the matter has been amicably settled for all the entities. We wish the PhonePe team the very best for its stated vision of building a homegrown horizontal, local Appstore. ’’  

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