Alibaba has injected over $500 million USD in the parent company of Indian e-commerce company PayTM, One97, reflecting its commitment to India’s fast-growing e-commerce sector.
The latest funding is the second installment in One97 from the company’s ecosystem, with $200 million USD laid out for a 25% stake in February by the Alibaba’s financial affiliate, Ant Financial.
According to sources who spoke to the Financial Times, they originally planned to invest a second installment of $375 million USD to take a further 20% stake, but upped the figure to over $500 million to reflect the company’s higher valuation.
It’s not clear why Alibaba agreed to multiple installments, thought it could have to do with tentative developments in the Indian e-commerce market.
Last month, PayTM was granted conditional approval from the Indian government to set up an online payment bank along with 10 other companies. The license allows PayTM to extend its services by setting up debit card products along with online banking and online transfer services. It’s possible the license could have sweetened the deal for Alibaba or at the very least affected PayTM’s valuation.
India’s domestic e-retail and e-commerce market is experiencing rapid expansion right now. Several local companies including Flipkart and Snapdeal have made headway in the industry. Flipkart recently reporting a $15 billion USD valuation, while U.S. contender Amazon is also looking to edge into the market.
PayTM is currently the country’s largest online wallet provider, with over 100 million users, according to the company.