Fintech company Paytm is believed to be in discussions with Japanese conglomerate SoftBank to raise over USD 1 billion.

The deal, if successful, will value the Alibaba-backed Paytm at over USD 7 billion from the current USD 5 billion, multiple sources said. When contacted, Paytm and SoftBank declined to comment.

Interestingly, SoftBank was an early investor in Alibaba.

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The talks come at a time when SoftBank is working on a sale plan of e-commerce firm Snapdeal and is likely to make an announcement in the next few weeks.

SoftBank is the largest shareholder in Snapdeal, which is locked in an intense battle with Amazon India and Flipkart. One of the sources said Paytm may buy Snapdeal-owned payments firm Freecharge as part of the transaction with SoftBank.

The funding will also help Paytm accelerate expansion ahead of the launch of its payments bank service. The Alibaba-backed company already runs mobile wallet and e- commerce services.

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Paytm has seen manifold growth in transactions on its platform after the government scrapped high denomination notes in November last year. SoftBank, which has committed an investment of over USD 10 billion in the Indian market, is also engaged in sale discussion for Snapdeal to rival Flipkart.

Paytm, which counts China’s Alibaba as a prominent shareholder, was valued at about USD 5 billion last year when it had raised USD 60 million from Mediatek. Also, Reliance Capital recently sold its 1 per cent stake to Alibaba for an estimated Rs 275 crore.