Payments company PhonePe has filed a formal complaint against Ventureast Proactive Fund-II (VPF) with SEBI.
The company said the complaint is based on alleged violations of SEBI’s code of conduct in relation to what the company said were VPF’s recent "side dealings" with Affle to "scuttle" the OSLabs majority acquisition by PhonePe. CNBC TV 18 had earlier reported PhonePe is in talks to acquire a majority stake in the domestic smartphone operating system IndusOS.
This SEBI complaint in India is in addition to a lawsuit that PhonePe has already filed against Ventureast and Affle in the Singapore High court.
The lawsuit claims that VPF "deliberately deceived PhonePe, by continuing to engage PhonePe and OSLabs on the sale of its shares in OSLabs in favor of PhonePe even though it had sold those same shares to Affle in a side deal without OSLabs and PhonePe’s knowledge on a prior date during a legally binding no-shop period."
Ventureeast is still to respond to CNBC TV 18's queries.
Sameer Nigam, CEO and Founder PhonePe said in a statement, ‘’As founders, we are always held to the highest standards of legal and ethical integrity by our investors. But these standards should apply to investors in startups too. I believe in this case, VPF has not only broken SEBI’s code of conduct, but it has also acted in complete negligence of its fiduciary duties as a large shareholder of IndusOS. By deliberately derailing PhonePe’s acquisition of IndusOS, a deal which all three OSLabs founders continue to also believe is in their company’s best long-term interests, VPF has also hurt OSLabs’ long term interests. We believe it’s important to expose such unethical conduct by VPF for the sake of the larger startup ecosystem. We have a very strong case and are confident that we will prevail on both fronts, and hopefully in the process also create a strong deterrent against bad actors trying to bully young startups.’’
On the other hand, Affle has accused PhonePe of trying to undervalue IndusOS and has also filed a lawsuit in a Singapore court.
The PhonePe - Indus OS deal is likely to be valued at $60 million, as per sources, but investor Affle Global, which owns 23% in Indus OS, says it values the company at $90 million.
This has led Affle to take legal action against the founders of Indus OS, while PhonePe has also filed a lawsuit against the marketing tech company in a Singapore court for blocking the deal.
"Affle Global Pte Ltd (“AGPL”) is a long-term investor in OSlabs Pte Ltd (registered entity of Indus OS) and our investment of over $20 million values OSlabs at over $90 million," the investor said in a statement.
"We believe that Walmart-owned PhonePe and founders of OSlabs are acting in collusion to prejudice our existing shareholder/investor rights based on unfair practices. We believe that PhonePe must strictly uphold the highest level of governance standards, respect fair valuation of OSlabs investments of existing shareholders and undertake fair processes in full compliance with the existing shareholders agreement, the constitution and Companies Act of Singapore. AGPL has no inclination to support the low-balled $60 million valuation-based PhonePe transactions for OSlabs. We value our investment based on over $90 million valuation of OSlabs and we are confident that OSlabs would unlock greater growth in the near future," Affle added.
Indus CEO Rakesh Deshmukh did not respond to queries.
Sources told CNBC TV 18 that PhonePe has also bought out a 30 percent stake in Indus OS from other investors and is looking to take a majority stake as part of the deal.
(Edited by : Aditi Gautam)
First Published: IST