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India Payment Firm Paytm Raises $300 Million

Indian online payment and e-commerce firm Paytm is raising $300 million from a group of investors led by Taiwanese chip-design company MediaTek, according to a person familiar with the situation.

NEW DELHI—Indian online payment and e-commerce firm Paytm is raising $300 million from a group of investors led by Taiwanese chip-design company MediaTek Inc., 2454 0.41 % according to a person familiar with the situation.

The investment values the Noida, India-based company at $5 billion, up from an earlier valuation of about $2.5 billion, the person said. MediaTek’s contribution amounted to $60 million, according to the person.

In a country where users are increasingly coming online via low-cost smartphones, Paytm provides a popular mobile app that can be used to pay for services like rides from Uber Technologies Inc. and utility bill payments.

Paytm uses its payment service to help direct traffic to its other businesses, like e-commerce. The company says it provides some 135 million mobile wallets in India, where few consumers have credit cards and many prefer to pay in cash.

The new injection comes after Chinese e-commerce giant Alibaba Group Holding Ltd. BABA -0.19 % ’s and its financial-services affiliate Zhejiang Ant Small & Micro Financial Services Group last year invested more than $500 million for a 40% stake in One97 Communications.

MediaTek couldn't immediately be reached for comment.

The funding comes as venture capital investments have been slowing in India amid talk of a bubble in Silicon Valley and concerns over global economic conditions.

Investors in the first quarter of 2015 pumped $891 million into Indian tech startups, according to Hong Kong-based AVCJ Research. That number fell 17% to $736 million for the first quarter of this year.

Write to Newley Purnell at newley.purnell @wsj.com

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