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Alibaba is all set to buy a 25% stake in One97 Communications Ltd., which owns Paytm to enter India’s ecommerce industry. The said deal will be closed in the second quarter of this year.

The amount of investment has not been disclosed by the company, which is the first investment by Zhejiang Ant Small and Micro Financial Services Group Co. in the Indian Market. The funds raised will be used by the Paytm to expand its mobile side of over 23 Mn users.

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Citi and Goldman Sachs were the financial advisors for the deal. Jack Ma, co-founder and chairman of Alibaba has shown his interest in making more investments in India because Indian suppliers are the second biggest users of Alibaba’s sites after users from China

Cyril Han, Ant Financial VP said, “With over one billion people, India’s payments market has vast untapped potential. As smartphone use continues to rise in India, we see great opportunity in the mobile wallet space and Paytm, as a leader in this field, is best equipped to build a mobile payments ecosystem in the country,

A statement said that the mobile version of Alibaba’s Paypal-like service, Alipay Wallet has over 190 million users and with an estimated value of about $50 Bn, Ant Financial is planning an initial public offering next year.

India is the fastest growing smartphone market in the Asia-Pacific with market standing at 72.5 Mn units in the third quarter 2014, which is a 15 per cent quarter-on-quarter growth and a 9 per cent year-on-year growth compared to third quarter 2013. This deal is evidence of above stated facts.

One97 communications is a mobile-internet company that offers digital goods & services. The company raised funding from SAIF Partner, Intel Capital and Silicon Valley Bank.

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