PhonePe's $60 million acquisition of content discovery platform Indus OS has run into legal trouble. The fintech company is battling two of Indus OS' existing investors, Affle Global and Ventureast, in a Singapore court. Both sides have filed competing lawsuits against each other at the Supreme Court of Singapore. This legal tussle comes ahead of PhonePe's completion of the acquisition before mid-June, for which the term sheet was signed and ready.
However, the plans seem to have hit a roadblock with Affle seeking an injunction over the deal, filing an arbitration case against Indus in May. Affle has made an appeal on its right to first refusal against the sale of Indus founder's stake to PhonePe, as mentioned in a report in The Economic Times. In return PhonePe dragged Affle as well as Ventureast to court.
PhonePe said that they believe that Affle and Ventureast have colluded to act in bad faith and violate the legal provisions of the term sheet, which they were both signatories to. It said that they have filed a lawsuit to protect its legal interests.
Affle meanwhile said that it has not signed any binding term sheet with PhonePe with respect to the sale of any investment till date. It said that it had invested $20 million in Indus, valuing the startup at $90 million, and owning 20 per cent stake. It added that it has more than 25 per cent minority voting rights in OSlabs Pte Ltd, holding company of Indus OS based in Singapore.
PhonePe spokesperson said that the deal would be completed soon after a decision on court proceedings. It said the legal hurdles will not impact PhonePe's plans to acquire Indus OS at all.
Indus OS has been made a defendant in the case but PhonePe is not seeking damages from it.
Walmart-backed PhonePe is suing Ventureast because Affle reportedly held talks with the company to buy its stake in Indus for increased voting rights.
A representative of PhonePe has confirmed to the daily that the company has secured 30 per cent stake in Indus and gained two seats on the board of the startup. Indus said that it is willing to close its acquisition with PhonePe and that all the founders and board members have signed the term sheet to sell a significant majority in the company to PhonePe.
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