• PayTM Digital Payment

PayTM Digital Payment (Photo : Getty Images)

Alibaba-backed digital payments firm PayTM has raised its valuation to more than $4 billion after Reliance Capital sold its 1 percent stake to Alibaba for Rs 275 crore ($41.25 million), the Hindustan Times reported.

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The report said that Reliance Group had invested about Rs 10 crore for the PayTM stake.

Citing unnamed sources, the report said that Reliance Capital, which is controlled by billionaire Anil Ambani, will retain a stake in PayTM e-commerce, which it got free after investing in the parent firm. PayTM was valued at $1 billion in its latest fund-raising round.

Both Reliance Capital and PayTM declined to comment on the deal, the report said.

Reliance Capital had earlier announced plans to monetize its non-core assets and liquidate its proprietary investment portfolio.

To raise about Rs 325 crore, PayTM founder and CEO Vijay Shekhar Sharma sold in December 1 percent of his shares in One97 Communications, the parent firm of PayTM.

The money raised from the sale would reportedly be invested into the group's payments bank operations, which was expected to start soon.

Alibaba Singapore e-commerce also recently invested $177 million into PayTM Mall, placing the value of the newly formed marketplace business at over $1 billion.

The pouring of investments to PayTM is seen as a move to challenge existing e-commerce unicorns in India, which include Amazon, Flipkart and Snapdeal.

Reliance Capital will continue to own some shares in PayTM E-Commerce Pvt Ltd, the digital goods marketplace company, the source said.

PayTM E-Commerce recently raised $200 million from Alibaba and venture capital fund SAIF Partners.

Reliance Capital has invested in several emerging businesses such as winemaker Sula, reverse logistics player GreenDust and healthcare chain Wellspring.

The company also invested Rs 38 crore in online travel agency Yatra, which was listed on Nasdaq through a reverse merger last year. Its 8.75 percent stake in Yatra is worth about Rs 175 crore.