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Digital payments firm, PhonePe on Saturday filed a formal complaint against Ventureeast, with markets regulator Securities and Exchange Board of India (SEBI), accusing the latter of ‘side dealings’ with Affle to scuttle its majority acquisition of IndusOS.

This SEBI complaint in India is in addition to a lawsuit that PhonePe has already filed against Ventureast Proactive Fund-II (VPF) and Affle in the Singapore High Court.

The lawsuit claims that VPF deliberately deceived PhonePe, by continuing to engage PhonePe and OSLabs, parent of IndusOS, on the sale of its stake 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.

Last month, Flipkart-owned PhonePe was in late stage talks to acquire homegrown app store IndusOS for $60 million in cash. However, soon after, mobile marketing platform Affle moved to the Singapore High Court suing PhonePe and OSLabs, while objecting to the deal.

PhonePe in its complaint to SEBI has highlighted serious misrepresentations, including a series of unethical and bad faith actions, as well as potentially illegal actions, that have been and are being continually undertaken by the Managing Partner, General Partner and Principal of VPF involved with this transaction.

‘’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," aid Sameer Nigam, chief executive and founder PhonePe.

“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,’’ added Nigam.

While the legal matters will be settled in court, PhonePe hopes SEBI to look into these gross ethical violations and dereliction of VPF’s fiduciary duties to protect the interests of OSLabs, its investee company.

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