BENGALURU: Alibaba , the world’s largest ecommerce company, is leading an investment round of between Rs 1,350 crore and Rs 1,700 crore in the online retail marketplace of Paytm , according to two people aware of the deal, marking the formal entry of the Chinese major into a market where it will now compete with US’ Amazon and India’s Flipkart Alipay, the payments affiliate of Alibaba, and investment firm SAIF Partners have also participated in the deal which is expected to value the online marketplace — spun out of parent company One97 Communications — at over $1billion.“The Alipay-Alibaba combine will now own over 50 per cent in the unit,” said one of the people cited above who termed this an opportune time for Alibaba to enter the fray.“The online marketplace business will either be called PayTM Mall or PayTM Bazaar,” said the person who estimates the business has annualised gross merchandise value (GMV) of about $1billion. The closure of the deal is expected to be formally announced in the coming weeks.Paytm declined to comment.A representative for Alibaba said the company regards India as an important emerging market with great potential and is absolutely committed to developing this market for the long term.“However, we do not in principle discuss rumours about our business plans,” she said in an emailed response.For Alibaba, entering the Indian market will mark an expansion of its global footprint and offer a chance to grab a slice of one of the world’s most attractive markets for online retail, which is estimated to be worth $14-16 billion at the end of 2016, up from about $11 billion in 2015, according to analysts and investors.Alibaba was widely expected to begin business in India as Tmall, its business-to-consumer brand in China, to differentiate its business from Paytm’s digital payment brand. But the online retail marketplace will now continue under the Paytm brand.Experts are of the view that Alibaba has an advantage in the business-to-business sector where there aren’t too many competitors.“Also it has done very well in bringing small vendors to customers in China,” said Pinakiranjan Mishra, partner, EY India.ET first reported the news of One97 spinning off its online marketplace unit as a way to facilitating the entry of Alibaba into the Indian market, in February 2016.Regulatory filings made by Paytm E-commerce show that it has already issued shares to shareholders of One97 Communications, most recently to Alibaba and Alipay.The latest transaction also marks the completion of the reorganisation of One97 into two distinct units — the payments bank Paytm Payments Bank Limited, and online marketplace Paytm E-commerce. This process began in August 2016.The e-commerce services business, which includes ticketing and offline payments at petrol pumps, will continue under One97, founded by internet entrepreneur Vijay Shekhar Sharma.Paytm also transferred its wallet licence to the payments bank unit last year, which is expected to launch operations in the next few months.Sharma owns a 51 per cent stake in the payments bank while the rest is owned by One97 Communications.The latest deal, the first significant transaction in the Indian ecommerce industry this year, is expected to lead to a shakeout in the sector, which has witnessed a tough battle between Flipkart, Amazon and Snapdeal Amazon has picked up marketshare with its aggressive spending even though the pace of growth in the industry has slowed overall.“It is a great news for the industry as there is a large player to take on Amazon, and this could potentially lead to acquisition of players. Alibaba will look to acquire and add speed while Amazon will acquire to stop their momentum,” said a founder of a vertical online retailer.EY’s Mishra reckoned customers will stand to gain as they will choose the company which provides “better service and trust”.