Mumbai,Feb. 5: Ant Financial Services Group, an affiliate of Chinese e-commerce giant Alibaba Group Holding, will pick up a 25 per cent stake in One97 Communications, which owns Paytm.

One97 is Ant Financial's first investment in an Indian company and the deal value is understood to be around $500 million, valuing One97 at over $1.5 billion.

Paytm is India's largest mobile commerce platform. It had started operations by offering mobile recharge and utility bill payments and now provides a marketplace to consumers via mobile apps. According to the company website, it has over two crore registered users.

Ant Financial, whose parent Alibaba is promoted by Chinese entrepreneur Jack Ma, said Paytm would use the funds to grow its mobile payment ecosystem and boost its commerce user base. Ant Financial will provide Paytm with strategic and technical support.

Alibaba had floated one of the world's largest IPOs in September, raising around $25 billion and listing the shares on the New York Stock Exchange.

'With over 1 billion people, India's payments market has vast untapped potential,' Ant Financial vice-president Cyril Han said. He added that the growth in smartphone use in India provided a huge opportunity to Ant Financial in mobile wallet and Paytm was well-equipped to build a mobile payment ecosystem.

'We are pleased to partner with Ant Financial in India. I believe that together, we will change the landscape of mobile payments and commerce in our country,' One97 Communications founder and CEO Vijay Shekhar Sharma said.

Set up in October 2014, Ant Financial focuses on small and micro enterprises and consumers. It operates businesses such as Alipay, Ant Credit and Alipay Wallet - the largest mobile payment service provider in China with over 190 million users.

Some of One97 investors include SAIF Partners, Intel Capital and SAP Ventures. It had raised $30 million from these investors in 2007.