Alibaba Group, MegaFon, Mail.ru Group and RDIF Close Joint Venture Deal

Alibaba Group, a global digital commerce company, MegaFon, a pan-Russian operator of digital services, Mail.ru Group (MAIL), the leading internet and IT company in Russia, and the Russian Direct Investment Fund (RDIF), Russia’s sovereign wealth fund, announce the completion of the joint venture transaction to integrate Russia’s key consumer internet and e-commerce platforms and launch of a social commerce joint venture in Russia and the CIS, which will operate in compliance with local data protection regulations.

AliExpress Russia JV (AER JV) is majority owned by Russian shareholders with a Board of Directors comprised of representation from RDIF, Alibaba Group, MegaFon and Mail.ru Group. Boris Dobrodeev will be the Chairman of AliExpress Russia JV Board of Directors. The parties have appointed two Co-CEOs – AliExpress Russia Head Liu Wei and First Deputy Chief Executive Officer of Mail.ru Group Dmitry Sergeev.

The AliExpress Russia JV offers unmatched value proposition for merchants, consumers and internet users across Russia and the CIS. It will accelerate 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 entered into a strategic cooperation agreement relating to, among other things, user traffic and product initiatives. The AliExpress Russia JV will be featured on Mail.ru Group’s platforms through exclusive product integration and marketing solutions.

Daniel Zhang, Executive Chairman and CEO of Alibaba Group, commented: “Alibaba remains focused on fulfilling our mission “to make it easy to do business anywhere”. The AliExpress Russia JV is an important part of Alibaba’s globalization strategy, and a key step toward our long-term goal to help 10 million small businesses reach profitability and serve 2 billion customers worldwide. Together with Mail.ru Group, RDIF and MegaFon, we are committed to accelerating development of the digital consumer economy of Russia and CIS countries by enabling regional brands and SMEs to reach and serve their target consumers through our unique and innovative shopping experience.”

Gevork Vermishyan, CEO of MegaFon, commented: “A new player in the international e-commerce market combines the best practices of the largest companies in Russia and China. This will allow MegaFon and its partners to offer users new services that take into account all the wishes and aspirations of our customers. The deal is fully consistent with our company's digital strategy - to develop an ecosystem of convenient online services that creates new opportunities for more than 77 million MegaFon customers.”

Boris Dobrodeev, CEO of Mail.ru Group (Russia), commented: “Building the unmatched user services of e-commerce in Russia is only possible with very strong partners. Partnerships are pivotal to Mail.ru Group’s strategy and fundamental to our success. Together with Alibaba Group, MegaFon and RDIF we are aiming to build an undisputed leader in Russian e-commerce and I'm convinced we will succeed. We worked on this joint venture during the last year and it is legally completed at last. Congratulations to all involved in the successful realization of the deal.”

Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), said: “We are happy to announce the completion of our first joint investment with Alibaba and Russian tech leaders. It’s a mutually beneficial investment for both producers and consumers also transforming the Russian e-commerce market. The partnership already provides access to e-commerce services for more than 50% of Russian population, and Russian suppliers have the opportunity to reach 1.5 billion customers in China and globally. RDIF is looking forward to new joint investments and opportunities in other projects.”

As announced on June 5 each shareholder has made its respective contributions to the AliExpress Russia JV which include the following:

•Alibaba Group has invested $100 million and contributed AliExpress Russia into the joint venture.
•MegaFon has sold its 9.97% economic stake in Mail.ru Group to Alibaba Group in exchange for a 24.3% stake in the AliExpress Russia JV.
•Mail.ru Group has contributed its Pandao e-commerce business and cash investments of $182 million (with $100 million contribution at closing and the rest of the amount will be contributed within the next 12 months. Initial contribution by Mail.ru Group is funded by debt) in exchange for a 15.0% stake in the AliExpress Russia JV.
•RDIF has invested $100 million into the AliExpress Russia JV and may further acquire additional shares of the joint venture from Alibaba Group for $194 million.