Alibaba Group, MegaFon, Mail.ru Group and RDIF Announce Signing of Definitive Documents for Joint Venture in Russia and the CIS
Jun 5, 2019
5 June 2019
Moscow, Russian Federation (June 5, 2019) — Alibaba Group (NYSE: BABA), a global digital commerce company, PJSC “MegaFon” (MoEx: MFON), a pan-Russian operator of digital opportunities, Mail.ru Group (MAIL.LI), the leading internet and IT company in Russia, and Russian Direct Investment Fund (RDIF), Russia’s sovereign wealth fund, have received approval from the Federal Antimonopoly Service (FAS) in Russia for a joint venture to integrate Russia’s key consumer internet and e-commerce platforms and launch a leading social commerce joint venture in Russia and the CIS, which will operate in compliance with local data protection regulations.
As announced in September 2018, the parties agreed to establish a joint venture (the AliExpress Russia JV) on the basis of the existing e-commerce business of AliExpress Russia and the strength of Mail.ru Group’s social and digital businesses. The parties have been working closely together to agree the definitive agreements relating to the AliExpress Russia JV based on the key principles set forth in the Framework Agreement signed in Vladivostok by all shareholders in September 2018.
The AliExpress Russia JV will be majority owned by Russian shareholders, overseen by a Board of Directors with representation from RDIF, Alibaba, MegaFon and Mail.ru Group, and managed by two Co-CEOs, one of whom will be nominated by Alibaba Group and the other by Mail.ru Group.
The AliExpress Russia JV creates an unmatched value proposition for merchants, consumers and internet users across Russia and the CIS, and accelerates the development of Russia and the region’s growing digital economy by leveraging and integrating the strength and expertise of the new shareholder group. As part of the shareholder collaboration, the AliExpress Russia JV and Mail.ru Group will enter into a strategic cooperation agreement relating to, among other things, traffic and product initiatives. As part of this social commerce cooperation, the AliExpress Russia JV will promote its services on Mail.ru Group’s platforms through exclusive product integration and marketing solutions.
Daniel Zhang, CEO of Alibaba Group , commented:
“This partnership will enable the AliExpress Russia JV to accelerate the development of the digital consumer economy of Russia and CIS countries in ways that no one party could accomplish alone. Together, we are uniquely positioned to offer consumers in Russia and neighbouring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally. Alibaba’s mission is to make it easy to do business anywhere. This JV is an important part of Alibaba’s international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world.”
Gevork Vermishyan, CEO of MegaFon , commented:
“MegaFon is pleased to enter into this partnership with global technology leaders Alibaba Group, RDIF and Mail.Ru Group. This agreement is in line with our digital strategy of ‘driving digital world’ aimed at creating new opportunities for over 76 million customers. E-commerce is a perfect fit for our rapidly developing ecosystem of partnerships to furnish best-in-class financial services, media, and other consumer offerings. This combination is beneficial for all parties, providing unparalleled access to the Russian consumer base.”
Boris Dobrodeev, CEO of Mail.ru Group , commented:
“Mail.ru Group is looking forward to leveraging the synergies within a leading social commerce joint venture in Russia and CIS countries. AliExpress Russia JV will become an undisputed leader in Russian e-commerce and create an unparalleled social commerce offering for our users. This partnership is in line with our strategy of bringing together people and businesses, as we will offer customers richer social experience and provide entrepreneurs with a platform for growth. We hope that the successful realization of the deal will strengthen our cooperation with local and global technology leaders. This is a major milestone for the Russian e-commerce market, and we believe it will promote the development of the digital economy”.
Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF) , noted:
“This landmark partnership will bring both significant benefits to customers and create unprecedented opportunities for services growth. RDIF continues to support the acceleration of the digital transformation of the Russian economy through the expansion of the e-commerce market. Bringing together the expertise of the companies at the forefront of social commerce and global retail opens a new era for the Russian market.”
Each shareholder has agreed to make certain contributions to the AliExpress Russia JV including the following:
- Alibaba Group will invest $100 million and contribute AliExpress Russia into the joint venture. This consists of Alibaba Group’s current Russia-based domestic and cross-border operations of the global retail marketplace business of AliExpress.
- MegaFon will sell its 9.97% economic stake in Mail.ru Group to Alibaba Group in exchange for a 24.3% stake in the AliExpress Russia JV with 30.2% voting rights*.
- Mail.ru Group will contribute its Pandao e-commerce business and cash investments of $182 million in exchange for a 15% stake in the AliExpress Russia JV with 18.7% voting rights.
- RDIF will invest $100 million into the AliExpress Russia JV and may further acquire additional shares of the joint venture from Alibaba Group for $194 million. Upon the exercise of the option to purchase the additional shares in the AliExpress Russia JV, the RDIF will own economic and voting stakes in the joint venture of 12.9% and 9.6%, respectively.
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