Paytm, a mobile payment services firm, has obtained the nod of its board to raise $375 million from an affiliate of its present investor, Alibaba Group.
The current fund raising puts the valuation of the online payments processor at $1.83 billion, allowing it to become one of the most valuable internet startups in the country.
The board has approved the latest funding as the company surpassed the targets laid out by the stakeholder regarding the doling out of funds.
Paytm, owned by One97 Communications Ltd, is expected to receive the latest funding within a span of six months, sources close to the development said, Live Mint reports.
The transaction will raise the stake of Ant Financial Services, a unit of Alibaba, to 41 percent in the company.
Prior to this, Alipay Singapore E-commerce Pvt. Ltd had invested $200 million into Paytm, taking its stake to 25.88 percent, according to documents filed with the registrar of companies (RoC).
Alibaba had changed the name of Alipay financial services to Ant Financial Services Group in October, last year.
"When a strategic investor steps in, you tend to go with the strategic partner for follow-on rounds," said Vineet Toshniwal, managing director of investment bank Equirus Capital.
With a valuation of $1.83 billion, Paytm finds a place among the most valued startups in the Indian e-commerce space, next to online retailers Flipkart and Snapdeal and cab aggregator OlaCabs.
"Paytm has already surpassed the business targets set aside for it," said the source.
Flipkart is currently the most valued startup backed by big venture capital firms, with its valuation skyrocketing to $15 billion from $1.5 billion in October 2013, followed by Snapdeal and Ola.
Recently, Noida-based Paytm announced its plans to enter the e-commerce sector. The company expects its secure platform and the range of options will enable it to take on Snapdeal and Flipkart.
"We have 33,000 sellers and we expect this to touch one lakh by year-end. They can list their products in simple steps and customers can also communicate with the seller through chat that is built into the platform," Paytm founder and CEO Vijay Shekhar Sharma told The Economic Times.
SAIF Partners, a venture capital firm, is also an investor in the company holding 37 percent stake.