Alibaba takes joint ven­ture route to ex­pand in Rus­sia

The Gulf Today - Business - - INTERNATIONAL -

MOSCOW: China’s largest e-com­merce firm, Alibaba Group Hold­ing has joined forces with a state fund and two tech­nol­ogy firms in Rus­sia, hop­ing that ac­cess to their client base of more than 100 mil­lion peo­ple will boost its de­vel­op­ment.

Alibaba will own 48 per cent of Ali­ex­press Rus­sia as a re­sult of a deal signed with Rus­sian Di­rect In­vest­ment Fund, mo­bile op­er­a­tor Me­ga­fon and in­ter­net group Mail.ru dur­ing Rus­sia’s Eastern Eco­nomic Fo­rum.

The three Rus­sian en­ti­ties will have a com­bined 52 per cent stake in the e-com­merce plat­form af­ter con­tribut­ing cash, shares and other as­sets.

“By part­ner­ing with Rus­sia’s lead­ing con­sumer in­ter­net plat­form, Ali­ex­press Rus­sia will lever­age Mail.ru Group’s 100 mil­lion in­ter­net users across its so­cial me­dia, mes­sag­ing, e-mail and on­line games prop­er­ties,” the com­pa­nies said.

E-com­merce has grown rapidly in Rus­sia in re­cent years, spurred by im­proved in­ter­net ac­cess, with turnover ex­ceed­ing $14 bil­lion last year, one third of which were cross­bor­der deals, ac­cord­ing to Rus­sia’s As­so­ci­a­tion of In­ter­net Trade Com­pa­nies.

Alibaba will fold its Ali­ex­press Rus­sia busi­ness into the new JV, while Me­ga­fon will swap its 10 per cent stake in Mail.ru for a 24 per cent stake in Ali­ex­press Rus­sia.

Mail.ru will con­trib­ute its Pan­dao e-com­merce busi­ness and cash in ex­change for a 15 per cent stake in Ali­ex­press Rus­sia, and RDIF will ac­quire a 13 per cent stake in Ali­ex­press Rus­sia.

Shares in Mail.ru jumped on news of the trans­ac­tion which is ex­pected to close in the first quar­ter of 2019.

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