Alibaba's financial arm Ant Financial, which runs the Alipay online payment platform, is already an investor in Paytm's parent, having agreed in February to buy a 25% stake.
One source with direct knowledge of the matter said the new deal would see Alibaba directly invest around US$600mil (RM2.2bil) for a share in Paytm that could take the Chinese group's total holdings to around 40% of the Indian payments firm.
The fresh investment would value Paytm at around US$4bil (RM15.1bil).
The sources declined to be named as negotiations are not public.
A spokesperson for Alibaba declined to comment on the development. A spokeswoman for Paytm also declined to comment, but said the group regularly engaged with investors on "various funding opportunities". — Reuters
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