Alibaba and SoftBank-backed Paytm are believed to be in discussions to pick up minority stake in online grocery retailer Bigbasket for about $200 million, according to sources.
The due diligence is on and the deal could be finalised in the next few weeks, sources privy to the development said.
They did not wish to be identified as discussions are still on and the deal has not been signed yet.
With people getting comfortable buying milk and bread online, online grocery segment is projected to witness strong growth over the next few years.
According to a report by Franchise India, the online grocery market is expected to be Rs 270-crore market by 2018-19.
Watchers say grocery would become bigger than electronics and fashion, which dominate online purchases. But grocery delivery is cash-intensive as players operate on wafer-thin margins and often end up losing money on delivery.
Players like Snapdeal-backed PepperTap has already shut shop.
However, the action is set to return with US-based Amazon's $500-million FDI proposal getting approved.
There have also been reports of BigBasket being in discussions with Amazon to sell stake.
The sources said investing in BigBasket would help Paytm in further strengthening its play in the e-commerce space.
Besides, it will also help the Alibaba-backed Paytm to take on Amazon, they added.
BigBasket has raised over $200 million from investors including Abraaj Group, Bessemer Venture Partners, Growthstory, Helion Venture Partners, IFC and Sands Capital.