Digital advertising firm Affle claims to have 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.

PhonePe had placed a bid to acquire a 92 per cent stake in Indus OS at a valuation of around $60 million. However, the biggest shareholder in the company, Affle Global Pte Ltd (AGPL), has opposed the deal.

AGPL estimates that the valuation of OSLabs, known as Indus OS, is around $90 million and has refused to sell its 25 per cent stake at a lower valuation.

The company operates app store ‘Indus App Bazaar’, which comprises over four lakh apps accessible in English and 12 Indian languages.

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

Both AGPL and Indus OS are registered in Singapore.

“AGPL has attended more than seven court hearings held in Singapore High Court from May 19, 2020 till June 18, 2021. As on June 18, PhonePe has clearly lost the corporate legal battle in Singapore,” AGPL said.

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

AGPL told PTI that according to 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, 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 the 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 according to the invalid resolutions may be deemed invalid unless explicitly validated by SIAC arbitration tribunal,” AGPL said.

In an e-mailed reply, PhonePe said 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 the 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 for deciding on resolution. When contacted, 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.

PhonePe said AGPL has issued incorrect statements and the matter is sub-judice and no final finding has been given yet.

“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.

PhonePe claims that when Indus OS board approved the resolution for stake sale on May 3 — the day EGM was held — the fintech firm was not a shareholder in Indus OS and that it was not barred.

“It is clarified that the court has directed the holding of EGM with old shareholders,” the Walmart-owned firm 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.