Snapdeal is reportedly negotiating terms with Alibaba for a record funding round of $1 billion, two people directly aware of the talks told the Economic Times.

Jasper Infotech, which owns online marketplace Snapdeal, is aiming for a valuation of at least $5 billion in this latest round, according to the Economic Times report. In October, the company had raised $627 million from Japan's SoftBank, valuing the company at $1.8 billion.

"Snapdeal has a term sheet from Alibaba, but is not getting the valuation (it) wants," undisclosed sources were quoted as saying, referring to the document that indicates an investor's initial interest.

"On the other hand, private equity firms are making higher offers, so it can likely be a joint investment," said one of the sources quoted earlier. A team of Snapdeal's top executives, including Co-Founder Kunal Bahl, was in China last week for negotiations with Alibaba, according to the person quoted above. "The company is still shopping its term sheet," he added. 

The investment by SoftBank allowed Snapdeal to compete on even terms against market leader Flipkart and US-based Amazon in a market that is estimated by Nomura to be worth $23 billion by 2018. All online retailers are offering deep discounts to lure buyers, in the process burning large amounts of cash. 

Last month, Ant Financial, an affiliate of Alibaba controlled by senior Alibaba executives, bought a 25 percent stake in the Indian payment services provider behind Paytm.