Alibaba has agreed to invest $177m in the online retail unit of Indian tech group Paytm, giving the Chinese tech group a controlling stake in one of India’s major ecommerce businesses.

The Chinese tech conglomerate is leading an investment round of $200m into Paytm Ecommerce, at a valuation of around $1bn, Paytm said on Friday. The ecommerce business was spun out as a separate entity last year by Paytm, best known for running India’s most popular digital payments platform and which is also poised to set up a quasi-bank later this year.

Alibaba and its affiliate Ant Financial had previously built up a 40 per cent stake in Paytm through investments including a $680m injection in 2015. Their combined stakes in Paytm Ecommerce will now account for the majority of its stock.

Singaporean fund SAIF Partners will account for the remaining $23m of the funding round.

Despite Alibaba’s backing, sales on Paytm’s ecommerce platform lag far behind those on market leaders Flipkart and Amazon India, analysts say.

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