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PhonePe goes to Sebi against Ventureast for ‘scuttling’ Indus OS deal

Digital funds agency PhonePe on Saturday mentioned it has filed a proper grievance with markets regulator Sebi in opposition to early-stage funding fund Ventureast and its prime officers.

The grievance’s essential premise is that Ventureast, an investor in homegrown content material discovery platform Indus OS, did “aspect dealings” with know-how agency Affle Global “intentionally” in a “unhealthy religion try and scuttle”
PhonePe’s acquisition of Indus OS.


International is a minority investor in Indus OS that has objected to PhonePe’s acquisition.

PhonePe mentioned its grievance to Sebi has highlighted “critical misrepresentations, together with a sequence of unethical and unhealthy religion actions, in addition to doubtlessly unlawful actions, which were and are being frequently undertaken by the managing companion, common companion and principal of Ventureast concerned with this transaction”.

The grievance follows allegations that Ventureast offered its stake in Indus OS to Affle,
giving it nearly 23% stake whereas the phrases have been already agreed for an acquisition by PhonePe.

“As founders, we’re at all times held to the best requirements of authorized and moral integrity by our traders,” PhonePe’s cofounder Sameer Nigam mentioned in a press release. “However these requirements ought to apply to traders in startups too. I imagine on this case, VPF (Ventureast Proactive Fund-II) has not solely damaged Sebi’s code of conduct, but it surely has additionally acted in full negligence of its fiduciary duties as a big shareholder of Indus OS. By intentionally derailing PhonePe’s acquisition of Indus OS, a deal which all three OS Labs founders proceed to additionally imagine is of their firm’s greatest long-term pursuits, VPF has additionally harm OS Labs’ long run pursuits,” he mentioned.

“We imagine it’s essential to show such unethical conduct by VPF for the sake of the bigger startup ecosystem. We’ve a really robust case and are assured that we are going to prevail on each fronts, and hopefully within the course of additionally create a robust deterrent in opposition to unhealthy actors making an attempt to bully younger startups.”

ET has
exclusively reported how PhonePe’s seemingly simple deal to amass Indus OS for $60 million has run into hassle after Affle objected to the deal.

Affle has sued Indus OS and PhonePe in a Singapore court docket, in search of an injunction over the proposed acquisition.

In response, PhonePe has additionally filed a counter lawsuit in opposition to Affle in addition to Ventureast.

reported earlier this month that Indus OS, which needs to shut the take care of PhonePe, has additionally moved a petition in opposition to Affle in a Singapore court docket.

Over the previous few weeks, ET has
reported in regards to the authorized tangle over the takeover. PhonePe was within the ultimate levels of closing its acquisition of Indus OS however Affle International had sought an injunction within the Singapore court docket on the deal and mentioned it had the correct of first refusal in opposition to the sale of the founders’ stake to PhonePe.

Indus OS had instructed ET earlier that its founders and board members had signed a time period sheet to promote a big majority within the firm to PhonePe. Based on the preliminary plan, PhonePe was seeking to purchase over 90% in Indus OS. The most recent developments would have a direct affect on this plan however PhonePe, in the meantime, has secured two board seats in Indus OS because it purchased over 30% within the firm from earlier traders like Omidyar Community, JSW Ventures and others.

Affle International beforehand instructed ET that it has invested over $20 million to date in Indus OS and owns a 20% stake, valuing the startup at $90 million.

That is one other level of battle as PhonePe has valued Indus OS at $60 million.

Indus OS was began in 2015 by three IIT alumni – Rakesh Deshmukh, Akash Dongre and Sudhir Bangarambandi.

The corporate operates a neighborhood Android app retailer known as Indus App Bazaar, which provides apps and content material in over a dozen Indian languages. The corporate mentioned it hosts greater than 400,000 apps and caters to over 100 million customers throughout India.

Via this acquisition, PhonePe’s plan is to convey a wider array of apps on its platform by way of in-app integrations. If it occurs, this could be PhonePe’s second acquisition after it
bought point-of-sale startup Zopper in 2018.

Bennett, Coleman and Firm Ltd (BCCL), the writer of Financial Occasions, is an investor in Affle Holdings Pte Ltd, which owns Affle International.

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