Alibaba sold a 3.1% stake in One97 Communications, owner of Indian digital payments firm Paytm, for a total of $125 million through a block deal on Thursday, according to Reuters.

The stake was sold at 536.95 rupees apiece ($6.61). As of the end of September, Alibaba held a 6.26% stake in One97 Communications.

One97 Communications went public in India last year after a massive $2.5 billion initial public offering (IPO). As of March 1, 2021, Paytm boasted 1.2 billion monthly transactions, with over 150 million monthly active users.  

Alibaba has a longstanding relationship with the Indian tech upstart. In 2015, the Chinese e-commerce giant and its fintech affiliate Ant Group jointly controlled about 40% of One97 Communications through a $680 million investment. The deal brought the Indian online payments and e-commerce firm to about $3.4 billion. 

But in recent years, as India has tightened controls on foreign direct investment (FDI), and the China-India relation has become more tense, Alibaba seems to be deliberately scaling back its investment in the emerging market.

In May 2022, Alibaba and Ant Group exited their investment in Paytm Mall, the e-commerce arm of Paytm. Paytm has bought back the 43.32% stake in the business unit for ₹42 crore ($5.17 million), Mint reported.

The Chinese company has sold certain shares in other investments including online grocery platform BigBasket and food delivery company Zomato. 

Citing sources, the Mint said Ant Group is not going to sell its stake in Paytm anytime soon.

Shares in One97 Communications plunged nearly 9% on Thursday following the news. Its market capitalization has plummeted about 75% since its IPO, as investors fretted over the company's monetization plans amid a potential global recession.