Alibaba's Ant Financial to buy 25% of India's One97 for over $500m
Alibaba's Ant Financial to buy 25% of India's One97 for over $500m One97 Communications

Chinese e-commerce giant Alibaba Group Holding's financial services affiliate will buy a minority stake in Indian payment services provider One97 Communications.

Ant Financial Services Group, formerly Alipay, has agreed to acquire 25% of One97, the companies said in a statement without disclosing the value of the deal.

The stake is worth over $500m (£328m, €437m) and the investment is a precursor to a likely One97 initial public offering (IPO), Reuters reported.

One97 runs Paytm, an m-commerce platform that allows users to shop or pay utility bills.

The deal reportedly values One97 at over $2bn, making it one of India's most-valuable startups. Citigroup and Goldman Sachs advised One97 on the deal.

Ant, investing in an Indian firm for the first time, will provide Paytm "with strategic and technical support for its business", the companies said.

Paytm has profited from the spread of affordable handsets and internet connectivity that has turned India into the fastest-growing smartphone market in the Asia-Pacific region, according to researcher IDC.

Pursued by the news agency One97's founder Vijay Shekhar Sharma said that Ant will buy new shares in his company.

Ant vice president Cyril Han said in a statement: "With over one billion people, India's payments market has vast untapped potential."

Paytm has some 23 million users. The $2bn valuation of operator One97 compares with the $11bn of Flipkart Online Services, India's largest e-commerce firm.

Alibaba rebranded its Alipay unit in October 2014.