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PhonePe vs AGPL: Affle claims victory in Indus OS stake sale legal battle

Online advertising company Affle which is involved in a bitter dispute with PhoneP claimed that it has won the initial legal battle in a case filed against it by Walmart-owned PhonePe in a Singapore court in the Indus OS stake sale matter.

Online advertising company Affle which is involved in a bitter dispute with PhoneP claimed that it has won the initial legal battle in a case filed against it by Walmart-owned PhonePe in a Singapore court in the Indus OS stake sale lawsuit. Both the firms are registered in Singapore.

PhonePe had placed a bid to acquire 92 per cent stake in Indus OS at a valuation of around USD 60 million. However, the biggest shareholder in the company, Affle Global Pte Ltd (AGPL), has opposed the deal attributing a lower valuation, saying that it estimates the valuation of OSLabs, known as Indus OS, around USD 90 million. The company has refused to sell its 25 per cent stake in the company. 

The company operates app store ‘Indus App Bazaar’, which comprises over four lakh apps accessible in English and 12 Indian languages — Hindi, Gujarati, Marathi, Tamil, Telugu, Urdu, Odia, Punjabi, Malayalam, Bengali, Assamese and Kannada.

AGPL had filed an injunction suit against the resolution passed by Indus OS approving stake sale to PhonePe which has been challenged by the fintech firm in a Singapore court.

On May 15, 2021, AGPL said it achieved the SIAC emergency arbitration interim order that restricted OSlabs, its founders and key shareholders from transferring about 20% equity ownership to PhonePe until the Right Of First Refusal is duly offered to the existing shareholders of OSLabs.

On May 31, 2021, AGPL said it won the Singapore Court orders invalidating resolutions related to PhonePe transactions and placed an injunction on any further transfer of shares to PhonePe & voting restrictions related orders as defined below. AGPL still did not issue any media statement.

On June 18, 2021, AGPL said it won the orders that require the EGM to be held properly by OSLabs and wherein PhonePe will not be allowed to vote as their shares were registered without proper resolutions unless such transfers are validated by the Arbitration Tribunal. The injunction orders on further registration of shares to PhonePe as well as any other furtherance of PhonePe transactions were ordered as defined below. 

“AGPL has attended 7+ court hearings held in Singapore High Court from 19th May 2020 till 18th June 2021. As of 18th June 2021, PhonePe has clearly lost the corporate legal battle in Singapore,” AGPL told in a statement.

However, Fintech firm PhonePe and OSLabs have refuted the claims made by AGPL that it has won the legal battle.

AGPL stated that as per the last hearing in Singapore High Court on June 18, PhonePe has lost its existing voting rights in OSLabs’ general meeting in view of the orders made by the court.

According to AGPL, as per court order, OSLabs’ resolutions circulated for PhonePe’s 92 per cent acquisition of OSLabs Pte Ltd were deemed invalid by the Singapore High Court.

It added that the OSLabs’ resolutions for issuance of new shares that aimed to dilute existing shareholders were also deemed invalid by the court.

“It, therefore follows that any corporate actions taken by OSLabs as per the invalid resolutions may be deemed invalid unless explicitly validated by SIAC arbitration tribunal. PhonePe will therefore not be allowed to exercise its voting rights in the OSLabs upcoming general meeting,” said AGPL.

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p dir=”ltr”>The company added: “Further, the Singapore High Court has ordered an interim injunction to stop OSLabs from registering any further share transfers related to PhonePe’s 92% acquisition transaction until further compliances or take any further actions with respect to the PhonePe’s USD60Mn acquisition attempt of OSLabs except that a general meeting be convened where PhonePe is not allowed to vote.”

PhonePe told news agency PTI that Omidyar Networks, JSW, Micromax etc have transferred their shares held in Indus OS in conformity with the transaction as agreed to by the parties who signed the term sheet but only AGPL is contesting even though it was one of the signees of the term sheet for the equity sale.

AGPL alleged that the term sheet for approval of Indus OS stake sale had expired on March 12 and the dates and signature pages of the PDF were allowed to be tampered to extend the expired validity without proper amendment or consent.

It said PhonePe will not be able to use its acquiring voting right as per the court order for deciding on resolution.

However, Indus OS denied all the statements made by AGPL in their entirety.

“All the statements are misleading and replete with misrepresentations. The issues mentioned by AGPL are the subject matter of pending disputes between the parties in arbitration and in the Singapore courts, where these issues are to be determined. Accordingly, given the sub-judice disputes, OSLabs is neither required to nor deems fit to comment on or engage with AGPL’s statements,” Indus OS said to PTI.

“The court has merely directed OSLabs to hold an EGM in connection with a subject-matter for which certain written resolutions had been passed,” a PhonePe spokesperson said.

It said all the allegations made by Affle in respect of low-balled valuations in the present transaction are incorrect and a meagre attempt to justify its own illegal and malafide actions.

“When Affle and all others signed the term sheet they agreed to the valuation being offered by PhonePe as it was a key term…What changed in a month’s time that the proper valuation agreeable to all investors suddenly is being called a low-balled valuation when nothing fundamental changed in the status of OsLabs,” PhonePe said.

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